Now the tariffs are set to plummet - well it is only a consultation at the moment but has anyone ever seen a 'consultation' change anything? Is that the end of new solar PV systems?

I for one won't be investing it any more on the proposed tariffs, leaving the money in the building society may well pay a better return in the next 25 years and you have the added bonus of still having the money.

Perhaps, but maybe not.

If anyone wants to pick holes in the following, be my guest. However, the broad numbers aren't that far off:

Cost (ex profit) for a 4 kW system right now, including all bit s and bobs and installation: £8,000

So cost/watt = £2

Expected life 25 years, I year has about 8,000 hours, and bright sunlight for about 1,000 of them.

So expected lifetime generation from 1 watt (peak) is about 25,000 watt-hours, or 25 kW hours.

So approximate cost per kW-Hr is about 8 pence per unit which is not ridiculously high.

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This doesn't include the cost of borrowing capital, or the cost of the distribution network. Add in the former if you like, but building society returns are less than inflation, whereas electricity costs aren't. The network costs are interesting, because the nature of domestic 4 kW systems is that much of the power will be used by the owner's property, and much of what isn't is likely to be used nearby, which actually REDUCES demands on the distribution network, unlike concentrated wind farms for instance, which increase demands on the network strongly.

I will pick a bit - the capital cost would be nearer £12500, so I am told, it may be a lot cheaper after mid-December though.In fact I have just seen a quote for £10000 on Google but that carefully excluded things that will cost a lot unless you are lucky. 

A 4 Kw system here on a 15 degree roof generated roughly 3500 kw this year assuming the rest of November and December are similar to January and February.

The panels deteriorate over their lifetime so lets call that 3000 Kw per year, over 25 years equals 75000.  Assume total cost of sceme is £15K with wiring etc which is 20p per unit.

FIT tarriff at the new levels of 21p per unit means that you have to use an aweful lot of electricity in the day, every day for 25 years to make this pay at all.

I think concreter's figures are more likely nearer the truth. The tarriff reduction is a big blow and will knock out those just interested in PV as an investment. Keep the cash in the bank and the capital is safe (ish) whereas after 25 years the PV investment is worthless. The tarriffs were too generous from the start and encouraged money makers rather than the intention of micro generation.

There will still be a demand from green minded home users, as was the initial intention, but the number of installations will decline dramatically.

One significant point that has been rarely mentioned is the fact that the FiT income is tax free. This makes the idea much more appealing to high rate tax payers but that's going back to an investment led decision rather than a carbon reduction one.

I've just paid for a 4kw system what a friend paid for 2.2kw just 18 months ago, so prices are falling. The cost of the panels is only about 50% of the fitted system, the rest being the inverter, scaffolding, wiring,labour and installers profit. Just because the panel prices are coming down doesn't mean the system cost will fall by the same degree.

Once the FIT steps down, the cost of putting in a solar system will jump down too. My theory is that where there is any subsidy, the market gears itself to divert that money to an unintended recipient.

bovril:

Once the FIT steps down, the cost of putting in a solar system will jump down too

Thats what someone who installs it told me would happen he said it would also sort the men out from the boys in the job

Hi

As an installer our whole industry is in dsarray! Its sad because many, many people have re trained and put huge effort into gaining the neccesary accreditations and certification in order to be a part of this emerging industry. I am sure prices will continue to come down, as they have been but sadly some of the "boys" will end up signing on over Christmas because the government saw fit to pull the rug from under them and significantly move the goal posts!

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I dont think it is quite the end of Solar PV. It is just the end of the boom. The FIT was only around to increase up take and to attract the public. It was meant for homeowners and regular people like you and I. What it did was make rich people even richer such as investors and free PV schemes. The DECC have screwed things up for the entire market by not controlling these schemes. The uptake was far greater than expected and it blew the budget. Things should have changed sooner. The new 21p tariff is aimed to provide homeowners with a return of 4.5% BUT the PV costs have come down, so with the right panels and installer you could see returns of over 10% even 12% if the efficiency of the panels is good enough. One thing that gets over looked are the bill savings. You are producing free electricity so you are saving about 12p per unit because you are not buying from the grid. Using your calcs above 75000 kW hours over 25 years x 12p = £9000 that's at today's electricity prices. Imagine what they will be in 25years?!?! 45p? 65p? Also the systems don't just stop working after 25 years. They will be working (albeit below 80% efficient) for 40-50 years. PV is a very good idea if you want to save money on electricity bills. The FIT was just a golden egg.