New PV FiTs - Good News?

My short answer is "No". In November I posted results from running the then proposed numbers though my simple model, showing that commentators were right to call "Foul". I think I should point out here that my model fits very well the results I am seeing from my own installation, so I have some confidence that, simple though it is, it does pretty well represent expectations. I have rerun the model on exactly the same example project except that I've used DECC's revised generation tariff of 4.39 p/kWh and their capital cost estimate of £1630/kW. Oh dear! I calculate the NPV at year 20 to be -£1129. Even if I assume that there's no need for an inverter replacement part-way through the project the NPV is still negative at -£516 (tho' the project does break even in year 25). To achieve my previous target of a 10% IRR the capital cost would need to drop to £837/kW, almost down to 50% of DECC's assumption. A more modest 5% IRR would require installation for £1247/kW. I would like to be proved wrong but I fear that there is going to be a nasty down-turn in solar PV installations.

The FiTs Tragedy

I have railed against HMG's handling of solar FiTs an number of times in this blog. Now Edie has provided a neat timeline of the inept handling of this policy. I won't repeat it here, just point you to the original. Please have a quick look.

How Will HMG Square The Climate Change Circle?

It is already being accused of blatant hypocrisy so how will HMG match its trumpeting of the "triumph" of the Paris deal with its own energy policy? I'd suggest, on current evidence, only with great difficulty and a rapid U-turn. In recent months the government has scrapped subsidies for on-shore wind-farms, suggested slashing solar FiTs, shelved the CCS demonstration fund, dumped the Green Deal (actually, no great loss that - it was never going to work - but the message still isn't a good one), killed the proposed electric car incentive scheme and may even sell off the Green Investment Bank. OK, so Amber Rudd has announced eventual closure of the country's coal fired power plant - but she has also stated that she wishes to see much of that fleet replaced by gas fired generators. Now that may lower the UK's CO2 emissions but by nowhere near enough to fulfill our Paris commitments. And it certainly fits rather poorly with Rudd's blather about managing security of supply. Really? With, perhaps 80% of the required gas having to be imported - and increasingly so from some of the less stable parts of the globe? Sorry, I don't see much squaring of that circle just yet.

UK Electricity Market Blamed For Liquidity Pooling

I don't wish to regurgitate the contents of this post from ICIS but I suggest that you give it a quick read. It just strikes me that the need for silly interventions like this (even if they do, apparently, work) just highlights the whole mess that has been made of the electricity market in the UK.