UK Solar Feed in Tariff Review Likely To Be Brought Forward

Is now the optimum time to invest in UK solar

The UK solar industry is about to enter its next phase. Since the introduction of the UK feed in tariff back in April 2010 the industry has grown at an exponential rate. The below graph demonstrates this meteoric rise.

The falling price of solar panels coupled with aggressive marketing by solar developers has seen Septembers solar installation exceed all expectation.
This curve will only escalate as we get closer to the feed in tariff review in April 2012. However there could be a substantial drop off should the government decide to bring forward its feed in tariff review as is looking increasingly lively.

The feed in tariff when conceptualised back in 2010 was never meant to be this profitable for developers or rooftop owners alike. A privileged owner of a south facing rooftop in the Devon or Cornwall can expect a return on investment well in excess of 15% pa rising with inflation. This would result in a payback period of some 7 years at very conservative inflation levels.

You may also have seen adverts for free solar installations, large funds and institutional money are poring into the sector trying to secure as much of the feed in tariff as possible before the reduction. There wont be many opportunities like this to secure a double digit, inflation linked, government backed return, and I suspect these contracts will be changing hands for vastly inflated prices in the next 5 years given inflation rates.

So how much will the feed in tariff be cut by? The figure most people are bandying around appears to be 40% this would bring it back to somewhere near to where the original ROI was positioned still make the industry profitable if slightly less appealing.

In the recent blog post by David Owen, Founder and CEO of Solar Media, points to the fact that solar PV is likely to once again become the victim of its own success. The “unless earlier action is deemed necessary” quote used by Solomon-Williams most certainly refers to the amount of PV installed in recent months, pointing towards a significant cut in feed-in tariffs which could take place at another fast-track review.

So we know the review is coming its now a matter of making hay while the sun shines…

We know solar is profitable, and if you have a south facing roof there has never been or probably ever will be a better time to fit a system to your roof. Not to mention the rising cost of energy bills, you may also have aspirations of owning an electric car one day, with a free fuel pump attached to your roof this will prove more than just a small saving given petrol prices.

But not all of us are blessed with a roof let alone a south facing one, I personally live in an apartment next to a very tally shady oak tree. So is there any way I can get a piece of the feed in tariff before its gone without moving house?
Willow Rivers has partnered with one of the South Wests largest Solar developers who have successfully signed up a large number of South facing residential and commercial rooftops for the benefit of private investors into solar.

This is a Win Win for all parties involved, the rooftop owner who is unable to afford the outlay for the systems gets money of their utility bills and a small income form the export tariff and you the investor takes ownership of the generation tariff and the income stream this achieves for the next 25 years.

This equates to a 9.5% first year yield rising with inflation over the next 25 years (average 14% pa base on 4% RPI). By only taking rooftops in the south west we maintain the highest return on investment and optimise our investors returns.

Sadly given the above changes to the FIT this opportunity will not be around for much longer, the drop in feed in tariff will likely bring the yield down to 6% however for those that do get in before the closing date they will own one of the most valuable and fully tradable commodities around for the next 25 year. Given the difficulty in finding inflation beating investments we expect the gold rush to continue for some time yet.

To find out more about owning solar rooftop systems in the South West please visit http://www.willowrivers.com/solar-investment-uk-asset.shtml

Growth of the UK solar sector since the advent of the FIT

Growth of the UK solar sector since the advent of the FIT

Solar Bond: Power Plant Site Visit amidst the Solar Rush

At the end of March the Willow Rivers team met with our Solar Bond’s solar power plant development team in Sofia, Bulgaria, to visit the power plant site as well as other plants connected or under development by the developer. With photo-voltaic teams from all over the world trying to secure their share of the ’solar gold rush’ in Bulgaria, the visit was a resounding success and only emphasised the unique opportunity that exists in Bulgaria at the moment.

A unique combination of high irradition levels, comparatively low land and labour costs, a generous feed in tariff now fixed at €0.3579/kwh, a practically new market (with only 25mw connected as of Dec 2010) and a government strategy outlining at least 600mw needed to fulfill EU renewable energy requirements, there was a genuine buzz in the air.

team on site of solar power plant

team on site of solar power plant

Having recently agreed a line of finance form a Norwegian Bank (AAA rated) we were also joined by their representative from Norway who is supported by the Norwegian Government´s export finance division. His industry insight and PV financing experience from Spain to France and Germany re-enforced that this is the only place to be right now for solar PV development.

Our first stop after meeting with AAA co-guarantor banks in Sofia was an existing connected park owned and managed by EVN, a large Austrian/Bulgarian utility provider responsible for off-taking the electricity produced by our plant. The secure park housed a combination of standard fixed PV panels with double tracker systems, where the panel is mounted on a motorised platform, which can swivel to harvest optimal radiation levels throughout the days. Our solar bond power plant will have a combination of the two.
(more…)

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Balancing expectation, one year on from Copenhagen

In our lives there are historical occasions that we remember vividly. What happened that day, where we were and how we felt. One of the most famous was the day JF Kennedy was assassinated, whilst more recently the tragic 11th September 2001 was a day none of us will ever forget. For me another one to add to that list was the 15th Conference of Parties in Copenhagen, December 2009; the day we turned our back on Mother Nature.

Nearly one year ago today I stayed up, gripped with hope, watching with baited breath for the world leaders to come together in the name of mankind. As the last light of hope flickered, President Obama came out to announce the agreement that would guide us safely in to the future. Thousands of ideas, hopes and dreams of a new world rushed around in my head. How would it be, how would society work together and function financially, where would our food and water come from?

Millions of hopes were shattered when no more than a token peace-keeping gesture was offered. Something for the press to chew on. Despite decades of research from the world´s finest scientists (independently inside and outside the IPCC for any skeptics still left), nothing on the scale required would be done.

“Yes” we know CO2 ppm is rising hundreds of times faster than ever before. “Yes” we know that last time CO2 ppm was at current levels the world was inhabitable. “Yes” we understand that a rise of 2 °C will send our ecosystems over an irreversible tipping point which will devastate society and “Yes” we realize that we could reach this tipping point by 2040. “Yes” we understand what needs to be done and how much funding needs to be invested in order to prevent this occurring and “Yes” we understand that if these aren´t implemented by 2012 then it may be too late.

“No”, we won´t do anything about it.

desertification

Since then these past 12 months have seen the slow painful asphyxiation of markets that were essential to creating a sustainable future. Where $1 trn should have been carefully distributed to put the future infrastructure in place, instead renewable energy markets have diminished in volume, flagship ventures have essentially shut down, and governments continue with promises and rhetoric for electoral goals whilst delivering far short of the scale needed.

In less than one week the 16th Conference of Parties will commence. At this point there is still no defined successor to the Kyoto Protocol which expires in 2012 and there is no agreed proposal for a structure to secure actual commitment in enforcing emission reduction levels. The main polluters, historically the US with over 300bn tonnes CO2 since the industrial revolution, China with over 130bn tonnes CO2 and modern heavyweights such as Australia, India and Brazil, direct policy attention away from their own pollution to smaller less relevant economies. So, do we dare to hope for a defined, measured and proactive proposal to be implemented after COP16?

Well, according to executive secretary for the UNFCCC Christiana Figueres, these talks in Cancun Mexico are not intended to establish a final and ultimate framework for global action. Apparently the conference will be a success if all the parties gain something from it and “balance their expectations so that everyone leaves carrying a positive achievement from their own perspective”. I have balanced my expectation.

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A History of Global Warming

Following the start of the industrial revolution, in 1824 Jean-Baptiste Fourier discovered a global warming “greenhouse” effect and in 1896 Swedish and American scientists independently concluded that CO2 was the likely cause of global warming. Nearly 90 years later in 1987 the WMO and UNEP established a scientific advisory body called the Intergovernmental Panel on Climate Change (IPCC) which issued its First Assessment Report in 1990, finding that the planet had warmed by 0.5°C in the past century and would rise further by 0.3°C per decade in the 21st century, accompanied by global mean sea level rises of 6 cm per decade. In 2007 the IPCC released its Fourth Assessment Report, concluding with 90% confidence that human activity is causing climate change and that “Global GHG emissions due to human activities have grown since pre-industrial times with an increase of 70% between 1970 and 2004.”

In 2008 our planet was estimated to contain 385 ppm (parts per million) of CO2 in its atmosphere, the highest concentration of CO2 for more than 630,000 years. This is widely agreed to be due to human industrial advancement, specifically the production and consumption of power from the burning of fossil fuels that are estimated to have caused around 85% of CO2 emissions. It is known that global temperature increase must be kept within 2°C to prevent an irreversible chain reaction of greenhouse gas release from forests, peat bogs, Siberian permafrost and oceans, which would change the planet’s ecosystems irrevocably. To ensure this temperature rise does not occur concentration of CO2 must not pass 450 ppm, which means reducing CO2 emissions to 60% below 1990 levels before 2030.

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Copenhagen; survival of the fattest?

A cruel twist of fate may have let the world’s major polluters off again. Unfortunately following the African nations’ walkout earlier in the 15th Conference of Parties in Copenhagen, the US and developed nations have been able to divert attention away from the serious issue of their own pollution levels, to the less important issue of controlling growth over developing countries’ emissions. Courtesy of Recharge News a new sculpture in Copenhagen captures the reality of the situation, poor nations carrying the rich, in “The Survival of the Fattest”.

poor nations carrying the rich

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Who is responsible for Global Warming?

Although China recently exceeded the US as the largest annual polluter, the US became the largest global polluter ever by overtaking the UK in 1910 with around 21bn tonnes cumulatively each at the time. US industrial growth has since given the US a cumulative carbon footprint of 334bn tonnes, as estimated in 2006 since 1751. When compared with China at 100bn tonnes, the UK at 72bn tonnes, Japan at 46bn tonnes and Germany at 41bn tonnes, it is easy to see who should take the most responsibility for global warming.

Take in to account that the US carbon footprint has tripled (from 110bn tonnes) in the past 50 years alone, during which time the exact same country has become by far the strongest economy in the World. It takes decades for carbon dioxide to have full effect on our eco-systems and these results of global warming (such as Hurricane Katrina which is recognised as a global warming influenced invent) are only now being noticed more and more in the last decade. Let’s hope that the US takes responsibility for their emissions at the Copenhagen Conference of Parties next week and make a financial commitment proportional to their impact on global warming.

Keep up to date with the COP15 progress as the US and other developed countries hopefully acknowledge their responsibilities to not only the developing World but our own children’s futures, here: http://en.cop15.dk/news/view+news?newsid=2942

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UN and the WWF highlight accelerating climate change

With the climate change conference in Copenhagen just 6 weeks away, these may unknowingly be the most important time of all our lives. Officials from over 190 countries are charged with the simple task of agreeing how to continue the global fight against climate change, and take over from the Kyoto Protocol. With many of the most fundamental issues still in dispute, we await with baited breath.

As a recent report from the WWF outlined that we have less than 5 years to stop uncontrollable climate change, hopefully by now the climate change scheptics would have been educated long ago. It seems however they remain steadfast in their own self-denial, be it adamant, ignorant or just stupid. With Nasa, UN and independent scientists and scholars all around the World pointing out that drastic and immediate measures need to be taken to prevent a 2˚C temperature rise, hopefully there will be no doubters in Copenhagen! And why the concern over a 2 degree increase? Only that a catastrophic breakdown of ecosystems, leading to mass migration, poverty, hunger and drought, with half of all animals and plants going extinct and a large sea level rise, and massive change in weather patterns. This has been forecast to occur at current rates WITHIN THE NEXT 35 YEARS.

Droughts, acidic oceans and melting glaciers are the most simple signs of accelerated global warming, a United Nations report said recently. Mountain glaciers in Asia are melting at such advanced rates that they could threaten water supplies far sooner than expected, including irrigation and hydropower, affecting up to 25% of the World’s population.

Copenhagen

So with regards to Copenhagen, what is really making this all so difficult? Our complete dependence on fossil fuels and an inability to realise an affordable and scaleable replacement is the main problem. Of course this is not helped by the fact that developed nations like China and the US have such high levels of pollution, and yet dont seem willing to even announce let alone stick to emission reduction targets. A fundamental change in developed society, how we live, how we travel, how we eat, will all need to occur if society is to have any chance of preventing climate change. Our lives will change drastically in the coming years, of that there is no doubt. Are we ready and willing for this? Perhaps also the largest single issue with the Kyoto Protocol was that the developed nations need the less-developed nations to help them reach their emission reduction targets, but dont seem willing to pay for it! With just over 6 weeks to go, these are nervous times indeed.

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WORLD LEADING SCIENTISTS WARN OF HIGHER TEMPERATURE INCREASES

Alarming news was released recently following an imperative study by some of the World’s leading scientists. A collective from the Massachusetts Institute of Technology (MIT), some of whom have been studying climate change for decades, produced startling results from their “Integrated Global Systems Model”.

This model is the most detailed computer simulation ever designed and studies the interaction between the most important aspects of global economic activity and the resulting climate change occurrences. In this recent test the model was programmed to run over 400 computational iterations, each one input with different variables and simulating the resulting climate change over the coming century.

Results were extremely alarming. From the iterations ran, the “best case scenario” for global surface temperature by the year 2100 was an increase of 3.4 degrees Celsius. This is less than a century away, in our grandchildren’s lifetimes. It is widely accepted that a temperature increase of this proportion will drastically change the face of global weather patterns, in a negative manner. Should this occur, and the Worlds leading scientists predict it will, then we can expect far more floods, monsoons, hurricanes, droughts and wild-fires.

From the 400 iterations, the “worst case scenario” calculated that if we do nothing to prevent our current CO2 emissions growth rates that the potential surface temperature could increase by as much as 7 degrees Celsius.

If anyone is equipped enough and wishes to challenge the MIT teams‘ results and theories, then they should step forward urgently. However in the mean time I think we should all be investing everything we have in to saving our environment.

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Obama switches on Plug-in Electric Drive Vehicles

In what could be one of the defining legacies of his regime, President Obama has outlined a number of incentives to boost the global Green Energy market development. His recent bill earmarks $16.8 billion in direct spending for renewable energy and energy efficiency programs over the next ten years, $4.5bn to modernize the US grid with smart technology, $2,5bn for renewable energy and energy efficiency R&D and $2bn toward manufacturing of advanced batteries.

The bill also significantly increases the advancement and feasibility of Plug-in Electric Drive Vehicles (PED) in the US. Tax credits for installing alternative fuel pumps at gas stations are increased from 30% to 50% ($30,000 to $50,000), whilst $2bn is also ring-fenced for manufacturing of hybrid or electric cars. Potential owners of PED will also receive credits. The bill increases the tax credit for qualified plug-in electric drive vehicles for the first 200,000 placed in service. This is a good start although has some way to go to replace the 200,000,000 cars currently used in the US.

The substantial bill also includes many alternative incentives to enhance the global Green energy markets, including Tax Credits for investment and production of electricity derived from wind facilities, geothermal, biomass, hydropower, land-fill gas, waste-to-energy and marine facilities.

The bill is a great start and shows the world’s largest economy is determined to lead from the front, and should also ensure a great incentive for larger flows of global capital from private investors and corporations.

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RTC2 - Financial evaluation for REDD

As part of our second blog on the Road to Copenhagen, we ask our selves what will it take for REDD (Reducing Emissions through Deforestation and Degradation) to be endorsed at Copenhagen in December? To become a genuine financially-acceptable solution to the global climate change problem, the value placed on preserving the forests needs to increase.

Rhett Butler and colleagues devised forecast models to estimate the equivalent financial return from a 10,000 hectare forest over 30 years according to its use and REDD’s accreditation. Firstly they considered preserving the forest and giving it the current REDD voluntary credit market pricing, which only produced a net present value of up to $994 per hectare. Secondly they considered deforestation and development of a Palm Oil plantation, which generated a far superior NPV of up to $9,630 per hectare. Thirdly they applied the desired model, that of giving REDD credits the compliance market credit value which would result in a far more competitive NPV of up to $6,605 per hectare.

This clearly shows that from a financial motivation perspective, the protection of our forests to prevent irreparable climate change and damage is going to REQUIRE the REDD credits to be given a higher value than they currently are. Fingers crossed for the United Nations Framework Convention on Climate Change in Copenhagen in December this year!

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REDD in Action from Brazil to Kenya

Companies like ImageTree and centres like Woods Hole Research Centre in the US are providing two of the Worlds largest populations, Indonesia (4th) and Brazil (5th), with hope for reaching their carbon reduction goals. As two of the largest Green House Gas emitters, ranked 3rd and 4th respectively in the World, Indonesia and Brazil both have serious deforestation problems which cause the majority of their carbon emissions. Whilst we still have until Dec 09 in Copenhagen to find out what the COP decide to do with regards to any implementation of REDD policies, it is at least certain that some REDD activities and incentives will commence soon. Once the best form and methods of REDD implementation is decided, whether at a project or government-level and whether via the carbon market or an incentivized fund method, it will only be a matter of time before REDD activities become the norm. Very soon the REDD-related technologies behind forest carbon level analysis and deforestation rate assessment, protection and prevention, as such developed by ImageTree and Woods Hole Research Centre, are sure to be in high demand by global governments in the future.

Meanwhile in other areas of the World some countries are ploughing ahead with their REDD plans despite the certainty of the final outcome. In Kenya for example the Kenya Forest Service (KFS) have now signed a deal to protect their 80,000 acre natural wildlife area, with the entire project funded by sale of the land’s carbon credit values in the Voluntary Carbon market, as certified by the Voluntary Carbon Standard (VCS). For many of the twelve nations to originally receive funds from the World Bank’s Forest Carbon Partnership Facility the time to act is now!

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RTC1 - The Road to Copenhagen

In December of this year, the world’s governments will meet in Copenhagen to discuss the issue of climate change going forward from 2010 and beyond. The Kyoto Protocol will expire next year and with nearly all countries currently signed up (albeit without the most powerful - the USA), the planet sits and waits anxiously to see how climate change policy will be determined over the next decade. One of the most challenging tasks will be how both the developing and developed world are brought into the framework in someway.

Through this special blog on the “Road to Copenhagen” Willow Rivers will offer insights and opinions on the challenges and developments currently facing governments around the World. Kicking off this week with a brief mention on how the economic downturn is having an effect on the efforts of governments and business.

In these difficult times many governments will be reluctant to increase the burden on businesses unless it is absolutely necessary. However, many governments are mitigating the downturn by providing large sums of money investing in renewable energy infrastructure and other such projects. Businesses meanwhile are placing an even greater emphasis on cost control. Many will be looking to increase their energy efficiency, which will naturally reduce costs, and this coupled with reduced global business activity will also ease the demand for energy. However, this is where global leaders are presented with a headache - lower demand for energy translates into lower costs for fossil fuels, making investments into alternative energy less attractive.

This is but one of the many problems leaders will have to try and balance when Copenhagen comes round in December. Look out for further updates on Willow Rivers blog over the coming weeks as we look ahead to Copenhagen 09.

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