Worcester Renewables Ltd

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Tag: Domestic Installations

Cost of Domestic Solar PV installations to rise by 15% – by EU Demand

Currently domestic installations of Energy Saving Materials and technologies  only attract the reduced rate of VAT at 5%.

However if Brussels Bureaucrats have their way then the cost of any energy saving measure to domestic customers will go up by 15% as they levy the full rate 20% VAT.

What does this mean?

Potentially two things,

1) it could kill the Governments’ Green Deal initiative before it has even started

and

2) It could be the final nail in the coffin of self funded domestic PV installations.

Below is the latest information from Brussels

VAT: Commission requests UK to amend its rules on reduced rates

The European Commission has asked the United Kingdom to amend its legislation which allows a reduced VAT rate for the supply and installation of "energy-saving materials". This measure goes beyond the scope allowed under the VAT Directive.

Under EU VAT rules, Member States can only apply reduced VAT rates to a limited number of goods and services, which are clearly listed in Annex III of the VAT Directive. This list does not include the supply and installation of "energy saving materials". Therefore, the UK’s application of a reduced rate in this area contravenes EU legislation.

The request takes the form of a Reasoned Opinion (the second stage of an infringement procedure). If the legislation is not brought into compliance within two months, the Commission may refer the matter to the European Court of Justice.

Background

For press releases on infringement cases in the taxation or customs field see:

http://ec.europa.eu/taxation_customs/common/infringements/infringement_cases/index_en.htm

For more information on EU infringement procedures, see MEMO/12/464

For the latest general information on infringement measures against Member States see:

http://ec.europa.eu/eu_law/infringements/infringements_en.htm

 

and you can see the original here:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/12/676&format=HTML&aged=0&language=EN&guiLanguage=en

Government to Slash Feed-in Tariff for Solar PV

Energy Saving Trust FIT review fact sheet

Fact Sheet on the proposed changes to Solar PV Feed-in-Tariff rates

Last updated 26 October 2011

Introduction

The UK Government is proposing to reduce Feed-in Tariffs (FITs) for new solar photovoltaic (PV) installations as part of their comprehensive review consultation. See  www.decc.gov.uk/fits

If you install solar PV and your FITs application is received by your FIT supplier (also known as FIT Licensee) on or after 8 December 2011, you could be affected by the proposals.

Please note that these proposals are currently under consultation and are therefore not final.

However, we recommend customers should use the figures in the consultation if they are planning to install after 8 December 2011.

Only PV systems are covered by the UK Government’s current FITs consultation. Other FIT-eligible technologies will be considered as part of the second phase of the comprehensive review due to be published shortly.

Summary of proposals

The UK Government proposals which affect householders most are:

  • A reduced rate of 21p/kWh for solar PV installations <4kW – tariffs will be introduced from 1 April 2012 and will affect all installations with an eligibility date on or after 8 December 2011. See definition of eligibility date below. This tariff rate is designed to provide householders with a rate of return of around 4%.
  • New domestic energy efficiency requirements – from 1 April 2012, domestic installations must be accompanied by an Energy Performance Certificate (EPC) with a level C or above/which has completed all „Green Deal. measures. Where a domestic property does not meet these energy efficiency requirements, the Solar PV installation may receive a lower tariff.

The table below compares typical income and savings made for an average sized solar PV system in the UK along with simple payback period (cost divided by combined income and savings)

FIT Rates Total annual earnings and savings with a 2.9kW system Simple payback (years)
Current 43.3p/kWh £1,190 10
Proposed 21p/kWh £    640 18
  • 2.9kWp system, install cost of £11,500
  • Total earnings and savings include income from the generation tariff, export tariff on 50% of total generation and up to 25% of generation used on site.
  • Simple payback will depend on capital cost so the simple payback periods may vary depending on quotes received. Cost of solar PV has come down significantly over the years so we would expect the simple payback period to come down gradually.
  • Annual generation has been calculated as 853kWh/kWp using the Energy Saving Trust Solar Energy Calculator (see below) using the postcode SW1A 0AA (Westminster Palace)
 

To find out more about how this will be implemented, please download the full fact sheet:

 

Don’t delay – contact us for a quote NOW

Renewable Heat Incentive aimed at businesses, with some appeasement for domestic customers before 2012

The Renewable Heat Incentive (RHI) was launched last month by Energy Secretary Chris Huhne. It is the first of its kind to encourage renewable heat installations and is intended to reduce the UK’s carbon emissions by 44 million tonnes by 2020. Currently around half of the country’s carbon emissions come from the energy used to produce heat – over 95% of heat in the UK is produced by burning fossil fuels, the majority of which is gas. The Government is aiming for 12% of the UK’s heat demand to come from renewable sources by 2020, a major increase from the current level of 1.5%. Of the 12%, it is anticipated that just 1% will come from the domestic sector and so the initial focus of the RHI is on business users.

RHI tariffs are anticipated to be available for the non-domestic sector from July 2011 (Phase 1) and for domestic installations from October 2012 (Phase 2). Non-domestic sector includes industry, business and commercial, charities and not-for-profit organisations, public sector organisations, as well as a renewable heating installation serving multiple residential dwellings, and residential premises that have been converted for non-residential use.

The non-domestic installations cover solid biomass & municipal solid waste, ground source & water source heat pumps, deep geothermal, solar thermal, biomethane injection & biogas combustion (except from landfill gas). Air sourced heat pumps have been excluded at the moment and there is a requirement for the RHI payments to be metered rather than deemed heat output.

The RHI will be funded from a total budget of £860m (rather than a levy on heating bills) over the period 2011-2014. The RHI will last until 2020 with payments guaranteed for 20 years from entry to the scheme. Like the Feed-in Tariffs, tariff rates will be adjusted annually in line with inflation and the Government plans to introduce degression in 2012. Payments will be made quarterly, have to be paid to the owner of the equipment and cannot be assigned to anyone else. Tariff rates for non-domestic installations range from 2.6p per kWh to 8.5p per kWh.

Anyone who has installed renewable heat since 15th July 2009 will qualify for RHI payments, provided they meet the eligibility criteria. In order to appease the domestic sector, from July 2011 to October 2012 a one-off direct payment, the ‘RHI Premium Payment’, will be paid to subsidise the cost of qualifying renewable heat installations for eligible domestic properties only. Likely levels of these Premium Payments are £300 for solar thermal, £950 for biomass boiler and £1250 for ground source heat pump. Domestic RHI payments are likely to coincide with the Green Deal in October 2012 to allow a more ‘whole house’ approach to heat production and energy saving.

We will keep you updated of developments with the RHI. Further details are available from DECC (Department of Energy & Climate Change) at http://www.decc.gov.uk or the Carbon Trust at http://www.carbontrust.co.uk.