Power in your hands

09 August 2010

solarfarm HomeSun is a new energy company with a novel idea: Install solar photovoltaic (PV) cells, to the tune of £1 billion, on suitable homes free of charge, hence, enabling eligible candidates to reduce their energy bills and more importantly their carbon footprint. Sounds like there should be something in it for the energy company, well your right, there is, but the partnership can be mutually beneficial.

As of April 1st this year, the previous government introduced a financial incentive to producing your own renewable energy in the form of Feed-in Tariffs similar to the successful policy implemented in Germany. HomeSun's entitlement to the income generated from the Feed-in Tariff (subsidised by energy companies) is how they will recoup their costs. It consists of a generation price and an export price linked to RPI and currently set at 41.3p/kWhr and 3p/kWhr.

To be one of the 10% UK homes estimated to be eligible for full funding; your home will need to be due south facing, with the further south and west being optimum and with at least 30m² of clear, unshaded roof. This scheme will attract people that want to do their bit for the environment and in addition to reducing their expenditure on energy but who don’t quite have the financial resources to do implement a project of this scale. As well as covering the instillation cost, HomeSun maintain and replace the PV cells for 25 years over which time they hope to generate as much profit as generated power.

Perhaps, in the long term, it may be more lucrative for the dedicated homeowner to purchase the equipment themselves benefiting both from the free energy and the FiT’s. The average household can expect to earn/save £1,000 per year from FiT’s and the initial cost of purchase and instillation is around £11,000 so over a period of 25 years and considering maintenance costs, a tidy profit could be expected. It’s the traditional risk and reward quandary yet again.

The government is looking to reward early investors in the technology by reducing the generation prices by around about 3p/kWhr per year. The starting price you receive when you register will remain constant for the 25 years, barring any fluctuations due to RPI. These annual reductions for new instillations, however, will come into effect two years from the policies implementation (31/3/12). A table of the generation tariffs up to 2020 can be viewed here. The energy companies cover the cost of the FiT’s which is then passed on to their customers and as more people uptake on the scheme there will be a larger cost to the energy companies and hence a larger cost to the consumer. So if you are tempted, it may serve you best to get in quick!

While on the subject of PV cells and FiT’s, Chris Huhne, the energy secretary, has lifted a ban on councils selling surplus energy to the grid. As of next week, pending successful application to Ofgem (the gas and electricity regulator), councils will also be able to generate income from Feed-in Tariffs (or a higher commercial equivalent), designed to provide an incentive for councils to invest in renewable energy such as solar, wind, tidal etc.

With schools, hospitals, office buildings, leisure centres and municipal buildings all capable of becoming mini renewable power stations. Mr Huhne said last week with further comment expected this week: "For too long, Whitehall's dogmatic reliance on 'big' energy has stood in the way of the vast potential role of local authorities in the UK's green energy revolution. "This is a vital step to making community renewable projects commercially viable, to bring in long-term income to benefit local areas, and to secure local acceptance for low carbon energy projects."

If interested, further reading:

In depth look at how the system could benefit you: HomeSun website.

Feed-in tariffs, how they operate and could benefit you: FiT information site. or the wikipedia page.