Worcester Renewables Ltd

t:01386-871490 e:info@WorcesterRenewables.com

Tag: Commercial Clients

Feed-in Tariff tables from 1st August 2012 (until 1st November 2012)

 

Band (kW) Prior to August 1st
(Single Installation)
Standard generation tariff
(p/kWh)
Multi-installation tariff
(p/kWh)
Lower tariff
(if energy efficiency requirement not met)
(p/kWh)
Period of Tariff
(Years)
•4kW (new build)
21.0
16.0
14.4
7.1
20
•4kW (retrofit)
21.0
16.0
14.4
7.1
20
>4-10kW
16.8
14.5
13.05
7.1
20
>10-50kW
15.2
13.5
12.15
7.1
20
>50-100kW
12.9
11.5
10.35
7.1
20
>100-150kW
12.9
11.5
10.35
7.1
20
>150-250kW
12.9
11.0
9.9
7.1
20
>250kW-5MW
8.9
7.1
N/A
N/A
20
stand-alone
8.9
7.1
N/A
N/A
20
Export
3.2
4.5
4.5
4.5
20

So what does this mean to business and commercial installations?

It depends upon who you do business with.

Worcester Renewables buys direct from the manufacturers, and with 4 – 6 week lead times between purchase and delivery our prices are already determined for post 1st August, and whether your purchase before or after 1st August you will still see an ROI, index linked of 10% year on year.  However if you can install before the  1st August you will benefit from those payments for 25 years, as opposed to a reduced 20 years.

We also have funding available for a number of sites, so if you believe that you have a property that may be suitable for the installation of Solar PV, then just fill in the form below and we’ll get straight back to you:

 

[si-contact-form form=’7′]

DECC confirms FIT (Feed-in Tariff) changes to be 1st August

At the Ministerial announcement in the House of Commons today, Greg Barker laid out plans for the changes to the Feed-in Tariff to apply from the 1st August 2012

Changes to solar Feed-in Tariffs

Tariffs for solar pv installations to be reduced from 1 August:

  • 16p/kWh for household scale solar pv installations to reflect fall in cost of the technology, delivering a return of about 6% for a typical installation.
  • Tariffs for larger installations also to be reduced to reflect cost reductions but with most tariff cuts lower than proposed in February.
  • Reductions to apply to new installations from 1 August, instead of 1 July as proposed, in recognition of low uptake from 1 April and providing time for industry to adapt.

Multi installation tariff increased to 90% of standard tariff

  • Organisations with more than 25 solar pv installations will get 90% of the standard applicable tariff, increased from 80%, reflecting new evidence on costs involved for these projects.

Reduction in tariffs over time in line with uptake of FITs scheme

  • Ensuring solar PV is not over subsidised.
  • Average tariff reductions of 3.5% every 3 months, reductions will be bigger (up to 28%) if there is rapid uptake.
  • Tariff cuts will be skipped (for up to 2 quarters) if uptake is low.
  • Uptake in 3 different bands (domestic (size 0-10kW), small commercial (10-50kW) and large commercial (above 50kW and standalone installations) will determine the quarterly reductions within those bands.

Increase export tariff from 3.2p to 4.5p/kWh

  • To better reflect the real value of electricity exported to the grid.

RPI index-linking of generation tariffs to be retained

  • Reflecting the high value investors place on this element of the FITs scheme.

Scheme lifetime reduced from 25 to 20 years for new solar installations

  • Reducing the lifetime costs of the scheme and bring solar in line with most other technologies supported under FITs.

Tariffs for installations which do not meet the energy efficiency requirements will mirror the tariffs for standalone installations

  • Ensuring energy efficiency is still encouraged as tariffs are reduced.

Government Announces Blow to Business on Enhanced Capital Allowances (ECA)

Some of our commercial clients have expressed confusion as to what capital allowances can be claimed for solar photovoltaic panels.

They had hoped, quite naturally, that they could claim the equipment under the enhanced capital allowances, allowing them to offset the whole cost of the installation against profits in year 1.

Unfortunately, in an email we received yesterday, the Government confirmed that solar pv systems do not currently qualify for enhanced capital allowances (ECA) – the reason given – it is not seen as an energy saving equipment, as it is a generating device.

However it’s not all doom and gloom – so long as you mover quickly!

As a business, you may still be able to claim 100% of the cost in Year 1 however.

The confusion arises because in addition to technologies that qualify for the ECA, a business has an annual limit that it can claim on the Annual Investment Allowance (AIA) for all forms of equipment.

So if your business still has a portion of this limit left, it will still be able to offset some or all of the expenditure at 100%.

For this year (depending upon your year end) ending April 2011, the annual limit is £100,000 of capital machinery and equipment in each year.

As of April 2011, this drops to only £25,000, (the Government has to recoup some of the reduced Corporation tax!) so for businesses who are contemplating photovoltaics, it makes sense to purchase now rather than wait for even a couple of months.)

So, Solar PV is to be treated like any other capital investment

However it is not all doom and gloom even then!

In future you will first have a capital allowance of £25,000 and then, as a business  you can claim can claim 20% of the value in year 1 and then 20% of the declining balance in subsequent years.

For example suppose a business which next year purchases Solar PV of say £100,000, (and has no other capital investment to offset) you can claim:

Year 1 £25,000 + £15,000 (20% of £75,000)
Year 2 £1,800 (18% of 60,000)

and so on, one point to watch though – that 20% is about to be reduced to 18% meaning that instead of being able to right off over about 8 years, it will now take 10 years

In detail

Companies may claim allowances on their qualifying plant and machinery expenditure.

One important element is a reduction in the 100% Annual Investment Allowance from £100,000 to £25,000 from 1 April 2012 although the Chancellor noted that 95% of all businesses will still obtain 100% relief for their qualifying expenditure.

Most qualifying expenditure will fall into the general pool on which the current rate of allowance is 20% calculated on a reducing balance basis. This rate will reduce to 18% for chargeable periods ending on or after 1 April 2012. Certain qualifying expenditure is required to be included in the special rate pool, including for example integral features, high emission cars and long life assets. The current rate of allowance for this class of asset is 10% calculated on a reducing balance basis. This rate is to reduce to 8% for chargeable periods ending on or after1 April 2012.

Where a chargeable period spans the change of rates on 1 April a hybrid rate will apply. For example, for a chargeable period to 31 December 2012 hybrid rates of 18.49% (91/366 x 20% + 275/366 x 18%) and 8.5% (91/366 x 10% + 275/366 x 8%) would apply.

The special rates of capital allowances for the oil and gas industry will continue to apply.

The Annual Investment Allowance is a 100% allowance available to companies, currently on the first £100,000 of their qualifying expenditure on plant and machinery. Certain capital expenditure, including in particular expenditure on company cars, is excluded from this allowance. The annual allowance is to reduce to £25,000 from April 2012. Rules to cover transitional periods are due to be published nearer to the date of change.

Many thanks to our friends James Geary and Will Silsby over at Rabjohns for helping to explain this  – you can find them here: Rabjohns.co.uk