FREQUENTLY ASKED QUESTIONS: STANDALONE PV

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1 FREQUENTLY ASKED QUESTIONS: STANDALONE PV What is Standalone PV? Standalone PV (anything over 250kW) is defined as not attached to a building and not wired to provide electricity to an occupied building. What is the Government target for Renewable energy and does Solar PV contribute? The UK Government has set a target for 15% of all energy to come from renewable sources by Within this, the UK Renewable Strategy set a target for 30% of electricity in 2020 to come from renewable sources. In 2012 the UK produced only 11.3% of electricity from renewable sources. Solar PV is one of renewable sources being targeted to deliver this. How much Solar PV Capacity is there? In 2012 more than 30GW of Solar PV capacity was installed globally, of which European countries accounted for nearly 17GW, taking the total installed capacity to 101GW. Installed capacity of Solar PV in the UK is currently around 2GW, with the Government having an aspiration for a total of 20GW to be installed by In order for this to be achieved it would require over 2.5GW of Solar PV capacity to be installed each year, more than the total installed capacity in the UK at the present time. Total installed Solar PV capacity in the UK by year Total installed capacity (MW) 1, Source: DECC, Renewable sources of energy: chapter 6, Digest of United Kingdom energy statistics (DUKES June 2012) How much potential for Solar PV is there in the UK? The UK has significant potential for large scale ground mounted Solar PV. DECC forecast the potential agricultural land area for ground based installations is just 0.05% of all agricultural land, calculating the total potential ground mounted PV resource from this as approximately 9GW of installed capacity, some 4.5 times the current total installed capacity (which is predominantly small scale and roof based). This equates to c. 1,800 5MW systems. 1

2 Is the UK a good place to invest in Solar PV?? The UK is an attractive place to locate Solarr PV. Irradiation levels are high enough for the effective generation of electricity, with the most attractive areas being in the Southh West as the t map indicates. Source: The table shows that annual sunshine hours do not materially deviate from thee long term average, with the standard deviation of the t above data at 6.9%. Investors inn Solar PV can take comfort from the fact that revenue (ultimately driven by irradiation) should not be liable to volatility and unpredictability over the long term. 2

3 Annual UK sunshine hours as a percentage of the mean (100% equals mean) 140% 120% 100% 80% 60% 40% 20% 0% Source: Met Office Does Solar radiation vary across the year? The graph below shows estimated expected average irradiation, by month, at FIM s offices. It shows that 70% of annual irradiation (therefore in simple terms 70% of output) is in the six months from April to September. Average irradiation as a percentage of annual total 14% 12% 10% 8% 6% 4% 2% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: PV GIS Does Solar PV generate 24 hours a day? Solar modules only produce electricity during daylight hours, which means most generation is exported at peak times (Monday to Friday, 7am to 7pm) when electricity prices are higher. 3

4 What does a ground mounted Solar PV asset consist of? Photovoltaic modules/panels constructed from layers of semiconducting material this is where electricity is generated. Mounting frames panels are fixed to mounts which are secured in the ground. Inverters connected to a number of PV panels which convert direct current to alternating current for use in the grid. Cabling cables connecting the arrays are buried underground for protection, this also allows the land to still be used for agricultural purposes such as grazing. Security high specification security fences, CCTV cameras and alarm systems will be installed to protect against theft or vandalism. How does Solar PV work? The PV technology employs layers of micro fine crystalline silicon to convert ordinary sunlight into electrical charges. A single PV cell consists of two or more thin layers of semiconducting material, most commonly crystalline silicon. When the silicon is exposed to light, small electrical charges are generated and conducted away by metal contacts as direct current (DC). In order to maximise energy collection and conversion, single cells are connected together in a module. These modules are the building blocks of the PV systems and are, in turn, connected together to generate usable volumes of electricity. There are essentially two types of PV crystalline technology which is currently the most used technology. Monocrystalline cells: These are made using cells cut from a single cylindrical crystal of silicon. While monocrystalline cells offer the highest efficiency (approximately 18% conversion of incident sunlight), their complex manufacturing process makes them slightly more expensive. Polycrystalline cells: These are made by cutting micro fine wafers from ingots of molten and recrystallised silicon. Polycrystalline cells are cheaper to produce, but there is a slight compromise on efficiency (approximately 14% conversion of incident sunlight). Who makes the panels? There are now many panel manufacturers with proven track records. Many of the largest are Chinese companies, with three of the top four solar panel manufacturers (by market share) being Chinese. In recent years global solar panel production has shifted from primarily the United States to Japan, then to Europe and now to Asia. Yingli, the worlds third largest panel manufacturer by market share, and a company whose panels are widely used in the UK, had revenues in 2011 of over US$2 billion. What is the cost per MW? The current installed cost is around 1millon/MW. 4

5 Are warranties available? Investors normally source solar parks that have been installed with a full warranty package from a reputable installer. Including, but not limited to: A 10 year warranty on PV panels. A 5 year warranty on inverters. A defects liability period in which the installer will rectify any defects. Liquidated damages in case of lost revenue caused by defects. An output guarantee for the panels as discussed below. An availability guarantee of c. 99%. Solar PV modules have an expected life of around 25 years. Manufacturers often guarantee output from the modules for 25 years; typically this output warranty is for annual performance degradation of c. 0.4% to 0.6% per annum with a final year output guarantee of 80% to 85% of the nameplate capacity. Are solar PV assets expensive to maintain? Because the plants contain no moving parts, once installed they require little maintenance. Due to this the plants have low operating costs relative to revenues, typically circa 25% and high availability, typically 99%. As more plants are installed and installer s warranties expire a competitive operations and maintenance market is expected to mature and provide opportunity for cost savings. Can you get insurance for a Solar PV site? Yes, a typical insurance policy includes: Business interruption insurance this covers any period of lost revenue due to a fault, vandalism fire etc and aims to protect the investors return. All risks covers the equipment against damage. Public liability protects the owner against injury or damage to the public or their property. What is the incentive regime? Solar PV sites have two incentive options: Feed in Tariff (FiT) or ROC Regime. Both regimes have two elements: Brown Electricity Green Supplements Both FiT and ROC can benefit from Brown electricity prices by selling the power into the wholesale market. Fit projects however also have the choice to sell on the Brown electricity on a fixed price basis for 20 years under an export tariff at plus RPI. Both ROC and FiT nominated projects benefit from Green Supplements for 20 years and are grandfathered from accreditation. After the 20 years of Green Supplements, Solar PV would continue to earn the Brown electricity price until the end of its useful life. 5

6 What is FIM s preferred option to sell the Brown power? Brown electricity prices are currently circa 50/MWh and expected to increase substantially. FIM preferred this as prices are predicted to be substantially higher than the export tariff of plus RPI. What is the Renewable Energy Pricing for Solar PV? See the FIM paper on Renewable Energy Price June 2013: 6