League of suppliers

Here is a table of suppliers' apparent charges for a quarter's worth of electricity based on the best information I was able to glean from their sites. The list is neither exhaustive nor guaranteed accurate.

£208.30 - EDF online saver 6 (until June 2011)

£240.09 - Atlantic, no standing charge

£266.08 - EON Fixonline 7

£271.91 - British Gas

£277.50 - EDF Standard tariff

£296.88 - Scottish Power Premium Plus

£302.54 - Atlantic Online

£307.13 - Scottish Hydro

£307.30 - Scottish Hydro, no standing charge

£325.58 - Green Energy

£334.18 - npower

An extraordinary range of prices. In general, the tariffs that have no daily standing charge tend to be the cheapest.

Now that I have a spreadsheet set up for the various types of tariffs, it will be easy to plug in the appropriate numbers and see how my sample quarter usage would be charged.

Suppliers surprise

In a spare hour of time, I played around with the records I now hold of my house's consumption of power over the last year and a half. The plan was to use it as a basis for comparing the cost of buying electricity from different suppliers. It was spreadsheet heaven and the results were surprising. Previous spreadsheets had shown me that the second most important factor in making the PV array pay was by paying as little as possible for for the electricity I would have to buy.

I waded through the morass of tables and systems for charging for electricity and standardised on a typical three-month period to which I could apply each company's tariff. This is becaue many tariff rules apply to the quarter of a year.

It is saddening to see how complex the market is and how opaque it must be for the vast majority of consumers. There are two main charging systems; some have a daily standing charge, others don't but they have you pay a higher unit cost for an initial quantity of power which drops to a low tariff once you have used a set number of units within a certain time. In negotiating this mess, the spreadsheet is invaluable.

My current supplier, Scottish Power, is run-of-the-mill. It matched a slew of companies by being around £300 for the sample quarter. Suppliers of so-called green energy were the most expensive, going well above the £300 mark. This is to be expected as you're paying a premium for buying energy from wholly renewable sources.

The shocker was EDF energy. At £208 for the quarter, it was well below its nearest rival and nearly two-thirds of what I pay now. The catch is that this is a promotional rate which will only last until summer 2011, but even their standard rate is competitive. I believe that part of the reason for the low price is an aggressive push into Scottish Power's home market. Like most of the other large suppliers, there were further discounts for direct debit payment.

If I weren't about to install a solar PV system, I'd likely jump on this wagon, or at least investigate further. However, once the generating system is built, I'll be placing EDF at the top of the list of suppliers to investigate though I wonder what their reaction will be to me wanting to sell them power through the FiTs scheme. [Note from 10 May: I did change to EDF, with 7 May being my official changeover date.]

Whither green?

Readers of this blog (if there are any) might assume that I am an environmentalist, that I vote for the Greens and that the description 'tree hugger' would sit well on me. In fact I don't see myself as a 'Green', at least not in the conventional sense.

I do see myself as a technophile who believes in the ability of technology, if applied intelligently, to make our lives on this planet much more fulfilling and comfortable; and there's the important bit - intelligently. Not that I see myself as much of an intellectual heavyweight. Quite the opposite. My qualifications mark me as an also-ran lightweight and I marvel at the ability of true intellectuals to quickly marshall thoughts, memories and knowledge into coherent analyses of situations. I have to mull over things for ages.

However, I do seem to have a sense for the direction things ought to go to promote maximum happiness (How American is that?) and I am often surprised when my antennae are proved to have been right, even when I'm horribly outvoted or out-shouted on an issue. This is how I feel about the issues surrounding solar-generated electricity.

Environmentalism first. I think a clean, fresh environment is a good thing and I don't believe businessess have a right to dirty our planet in pursuit of short-term profit. But the rantings of many environmentalists bother me. Specifically, they seem to say that anything human is unnatural, almost as if we don't have a right to live on this planet. I believe we have a right to grow, multiply and consume as much as the bacteria that regularly manage to colonise my damp dishcloth. But like them, our growth will be limited by the resources available. The difference between us and the bugs is our intellect.

I think it is fundamentally stupid of us as a civilisation to treat coal and oil as energy sources. It is short-sighted, dirty and is essentially us burning our capital. It is a huge mistake for our governments and big business to have conspired to deplete these resources when unimaginable vast amounts of energy are all around. Just because burning this stuff was an easy path to take, does not make it the right thing to have done and I don't say this as someone who has swallowed the CO2 and the global warming case; hook, line and sinker. Coal and oil should be a capital resource, not a consumable. As a civilisation, we ought to take it out of our energy portfolio and invest in the rest.

Green politics next. I worry that political structures constructed around single issues will always tend towards extreme viewpoints as their proponents bicker and argue themselves to a purer interpretation of their ideal. I also don't like the Westminster version of democracy - winner takes all. Advocates point out that it leads to strong government and my face falls. The last thing we need is a strong government hammering home its policies on pathetic mandates. We ought to force these folk to share their power to dilute it so that little legislation gets passed until there really is a strong groundwell in its favour. I prefer the Liberal Democrats over the Greens as I believe their wider political viewpoint, less tainted by issues of left and right, is a safer bet. But as soon as they get too big, I'll have no problem with ditching them.

Tree huggers. Actually I do have some sympathies here. The term 'tree hugger' is often used as a perjorative term for people who take their environmentalism to silly extremes but it equally applies to people, like me, with a scientific outlook who understand that both organisms, us and trees, share the chemical miracle that is DNA and life on Earth. It was planetary scientist and science populariser Carl Sagan who pointed out in his TV series 'Cosmos' that, at the cores of our cells, we and trees are made of the same stuff. That's important to remember.

So I approach renewable energy as a practical technological solution to our need for energy. I think the FiT scheme to encourage renewable electricity generation is the best sign that I've seen that UK politicians are beginning to come around to smarter ways of doing things.

The spending begins

I sent a small deposit to Installation Company to get on their queue for dates to come and erect my solar PV array. I feel I ought to start my first spreadsheet to start accounting for every penny that goes out of or into this project. That's quite exciting. I've also arranged the finance for it and I have high expectations for the loan application.

One other thing I did was to mention it to a friend who might be the sort of guy who'd be interested in this.

Discussing timescales

I spoke with Installation Company yesterday on the phone to find out how quickly they thought they could start if given the go-ahead. Six weeks was the answer. I decided that if it is going to take that long to get started, I might as well keep applying for the small (£4,000) government loan that is still available. It would save some money, though hardly a substantial amount, and so I've written to the EST to keep the application process going.

Meanwhile, boss of Installation Company has suggested that I lodge a small deposit to get myself into the queue while I wait for the bureaucratic wheels to turn. We discussed his own generation figures which, at 7.1 units per day in the late winter/early spring, appear to be heading to be better than figures from the government which average 8 units per day. I mentioned that according to my spreadsheet, any improvement on government figures was highly significant to the project's finances. I could almost hear hear the boss's ears prick up. "Could I have a copy of that spreadsheet, please?"

My problem in life is that I'm a geek. I recently read that a characteristic of many geeks is that they often fail to realise the monetary value of what they do, Bill Gates being an obvious exception to the rule. Therefore I've sent Installation Company boss a copy of my 25-year projections with no more than a weak plea that if he finds the sheet useful in his business, he shows that in some way beneficial to me. I may be an intrinsically happy, settled person, but I'll never be a businessman.

Loan letter

We got mail today from Energy Saving Scotland to tell us that the maximum loan available for generating electricity from renewable sources is now £4,000. It is a shame that the loan and the grant departments at this quango are not a single unit, as it would have been nice to have been officially informed that we were not going to get a grant either.

My wonderful partner is more cautious about this whole process. She simply sees that we are going to have to find over £14,000 quickly and then have to pay it back, increasing our monthly outgoings. This is a very understandable position and it is true to say that as I plough deeper into this (and as I model it ever more carefully with my beloved spreadsheets), it has become less attractive than it was. However, it is still very attractive.

Based on my most recent models, we will have to find more money, initially at least. But it is only on the order of £20 a month. This is because the FiT payments are generous enough to cover our total electricity costs and cover most of the loan. Once the loan is paid, it's all very positive.

I see things over the long term. Seen over 25 years, worst case and assuming 3% inflation, we have two options: Do nothing and spend £38,000 on electricity; or spend £14,300 now and never have to pay for electricity for that 25 year period - maybe even make some money. A no-brainer if ever I saw one.

Commentators have described it as a gilt-edged investment with a guaranteed 8% return, or as a way of buying 25 years electricity up-front. The most interesting comment came from George Monbiot when he was bitterly questioning the validity of solar PV andthe FiT scheme in the Guardian: "If you own a house and can afford the investment, you'd be crazy not to cash in."

Coming to a conclusion

As the loss of government finance for the panels sinks in, we are coming to the conclusion that we should just go ahead with our installation using our own resources. It's going to take another month or more for Energy Saving Scotland to get their bureaucracy moving and maybe offer us a £4,000 loan that, while interest free, would not save us much compared to dipping into our own savings.

I went daft with a spreadsheet this evening. I laid out the incomes and outgoings of the project on a year-by-year basis, but this time I factored in inflation and the deterioration of the panels as predicted in their specification. It still looks good. Some thinking still to be done.

Finance changes

It was all looking too good to be true. And it is.

When I began this solar quest, it appeared that essentially the total cost of my system would be met, either by a grant or an interest-free loan from Energy Saving Scotland. I got my report as required and I sent off my forms about a week ago.

I've just had a look at the Energy Saving Trust's (EST) website where it turns out that in preparation for the arrival of the Feed-in Tariff (FiT) they have amended their policy regarding grants and loans for electricity microgeneration - it is not good news.

For a start, the grants have been stopped. That's £4,000 we won't get. Also, the limit for loans has been reduced from £10,000 to £4,000. Therefore, if we go ahead on the basis of our existing quote, we'll at best get a £4,000 loan and have to find the rest.

In my opinion, it is still worth going ahead, given the long-term finances. Furthermore, rather than wait another month for a relatively paltry loan and lose a month of generation, it may be worth simply going ahead on our own finances and eschew the government's attempts to incentivise this. Perhaps what I'm saying is that the FiTs scheme from the government is incentive enough and both they and I know it

Suppliers

I've started looking around for a company to whom I'll sell my microgenerated units. I still have to determine whether the company I sell to has to be the same as the company I buy from. In fact, I still have to determine the exact nature of the finances involved.

From the various solar power sites I've read, I'm getting the impression that exported electricity not only gains a 3p (or is it 5p?) per unit payment above the 41.3p FiT payment, but that some companies might choose to give more to attract people like me. Certainly it seems that if they don't, my decision would surely be based on who sells the cheapest leccy. That would likely be the big boys. I do hope the smaller operators have something up their sleeve to tempt me to go to them.

Funny thing is that with the FiT arrangements just 10 days away, few companies seem to be rushing to gain my business. I trawled through some of the websites of large and small energy suppliers. The small companies sometimes mentioned FiTs but didn't have a policy towards them. The big boys just didn't seem to care. I'll keep an eye on this.

Spreadsheet Heaven

Ever since my Dad demonstrated a computer spreadsheet to me, I've been in love with them. They are so damn useful, though I'm sure they frighten a lot of folks. Their more advanced abilities frighten me but with my basic knowledge of how they work, I've generated many spreadsheets for a huge range of tasks. I have one for work that I enter my start and finish hours into and it calculates total hours, overtime, pay, tax and a lot of other cool stuff. At home, we use spreadsheets to keep track of our family finances. I religiously note my book's Amazon sales rank (and the rank of some of my friends' books) to watch the trends and I keep a close eye on the sales of my photography on a plethora of microstock websites; all using spreadsheets.

It therefore should not come as a surprise that I have a sheet where I keep a note of the meter readings for my gas and electricity supply. I have this spreadsheet calculate the daily cost for both and I watch how the spend rises and falls with the seasons. One interesting aspect of this is to note how this year's consumption of gas compares to last year's. We had our walls and loft insulated during the summer and I'm happy to say that, despite us having one of the coldest winters in decades, we used 100 cubic metres less gas than we did last winter.

I just know that the arrival of a solar PV system is going to be spreadsheet heaven. Not only will I be able to count the units of electricity we use, I'll eventually be able to count what we generate, how much of our own power we use and how much is exported to the grid. I'll then be able to apply monetary values to the results and see if the system is costing more or less than expected, and even if it has started to turn a profit of any sort.

And just because I haven't got my beloved panels installed on the roof yet, don't think I haven't already created a solar PV spreadsheet because I have. I was real keen to try to model the overall costings of the system. I had accurate figures for how much power our house used in a year and at what cost. I had been told how much power my PV system was expected to generate and I knew how much it was going to cost to install. I put all this into a simple sheet and had it work out the costs and benefits over 25 years, the expected lifetime of the panels and the term of the FiT arrangement. So did it teach me anything? Well...

It seems the most crucial aspect is how much the panels will generate annually, followed by what proportion of that is exported and how efficient we can become. The matter of export is clouded by something I read today. It seems that until the introduction of smart meters, the powers-that-be are going to deem that I will use 50% of my generated power and export the rest. OK, so I can plug that into the sheet. Only smart meters are going to be able to tell when I use power and whether there was power available from the panels at that time. Assuming all goes well with the grant and the loan, the cost to me to install the system will be £10,300. Well it turns out (given that this model will include some relatively simplistic assumptions) that over 25 years, the panels will pay for all my electricity and net me £10,273 - the same as what they cost me! There's a coincidence.

OK, so what improves things? The government tables say that I will generate on average 8 units a day. What if it's 9? It's for questions like this that I almost dribble with excitement at the thought of the spreadsheet I'm going to create to find out for real. Meanwhile, my predictive model has its own answer. Now my 25-year income jumps to £14,817, a clear profit of £4,500 and my electricity paid for quarter of a century.

Now instead, let's imagine that I'm only getting my 8 per day, but that we're managing to use the vast majority of it. I suspect this will be the case. This house's electricity consumption is heavier than most. So instead of 50% exported, let's assume 10%. The income rises to £12,317, mainly because we're having to pay for less electricity from the grid. This yields a £2,000 profit over 25 years and the leccy bills covered.

I'll do one last illustration with the starting point restored to 50% exported and 8 units per day generated on average. This time, we'll see the effect of cutting our annual consumption by 2 units a day, something that ought to be easily realised, mostly by simply replacing our fridge. (Old, noisy, power hungry beast whose efficiency I've been watching with a power meter to prove my suspicions about it.) The income figure is now £12,463, a £2,100 return after 25 years for the sake of a better fridge.

I can't control how much my panels will generate though I suspect they might deliver somewhat more than the government says. But I do have some control over how much power we consume and when we consume it. The lesson is that it will pay to use less power, and that, once the smart meter is installed, we should try to use power when the Sun is out. Whether or not reality follows these predictions will only be learned when I get to grow a nice, shiny, new spreadsheet.

Trading power

It's now a waiting game as the bureaucrats deal with my application for funds for the solar installation. In the meantime, I can start to think about how I'll go about buying and selling electricity.

There seems to be an arrangement that current generators have whereby some companies will buy green power at very good rates because they can sell that power at a premium to people who want use only green power. The owner of the system I've seen buys and sells with a company called Green Energy who give him 28 pence for every unit he exports. I don't know what he buys his power for. However, on 1 April, everything changes when the Feed in Tariff (FiT) system begins.

FiT is a government system where microgenerators are guaranteed a fixed payment from the power company not just for every unit of power they export, but for every unit they generate. In my case, it will be 41.3 pence. It is the concept that makes a solar PV installation worthwhile. However, if I understand it correctly, it has interesting consequences. It no longer matters which company I go with because I will get 41.3 pence with all of them. However, I will still have to buy a large portion of my power and it is obviously in my favour to find a supplier who is as cheap as possible. This might be to the detriment of the smaller companies as I can imagine that Scottish Power, my current supplier, or Scottish Hydro will clean up this market. 

Perhaps, as the FiT system beds in, we'll find that companies will try to offer an extra few pennies per unit over the 41.3 p offered for power from the microgenerators. So far, it's not been easy to see what companies' policies are on FiT.

Time to start looking again.

Application time

A substantial part of today was spent filling out forms because in the middle of the afternoon, I got an email from the Energy Saving Trust. Attached to it were three PDFs; a list of accredited installers, a pack for applying for a grant and a report on my home's energy efficiency measures including recommendations for renewable energy systems that might be installed. This latter PDF is the important one. It allows me to make my applications for a grant and a loan for my solar power system.

[Later note: The grants were discontinued and the loans were reduced to a max on £4,000 - all before I could get to take advantage of them.]

There's a tiny bit of silliness in these applications. Both forms are going to two different departments in the same building. However, the grant application only requires me to include a reference number to their report. The loan application wants a copy of it, and it's 27 pages long. So where one form goes in a small envelope with a printout of my quote, the other has had to go in a large A4 envelope and we'll need to go to the post office to get the appropriate postage. So much for saving carbon.

I have to wait for up to 15 working days - call it three weeks - to hear whether I'm going to be awarded either the grant or the loan. As soon as I know, I can give the installer the go-ahead.

One other thing I looked into today was planning permission. I phoned the local planning department in the afternoon but it seems the appropriate person was not there. I'll phone them again tomorrow morning. I am pretty sure I won't need permission (or so I'm told) because I'm not in a conservation area and my panels won't go more than 200 mm from my roof. I'll know more tomorrow.

Crude calculations

We are told that our hoped-for panel array is expected to generate 2,900 units of electricity per year. Under the FiT scheme that would mean £1,200 income annually. If we manage to export 10% of them, then at 5p per unit extra, that would only add £15. Pretty small, so we'll disregard it for now.

I'm assuming we'll use 90% of these units (based on our relatively high usage - too many computers in this house). Therefore, we won't have to pay for 2,600 units. Given that we used 8,700 units last year, we'll still have to pay for 6,100 of them. At eleven pence each, that's £670 to find but we've saved £290 off our previous bill. This is good. It seems we can pay for our electricity from our FiT income and still have £530 left over, an average of £44 per month. But I haven't dealt with the cost of the system. 

If we get an interest-free loan for £10k, then each monthly payment should be £104 over the maximum 8-year term of the loan. With the £44 going on that, we'll have to find about £60 per month. However, that's £23 less than the £83-per-month we are spending on electricity now. Therefore, while the panels are being paid for, we'd be just on the positive side of this deal. All this assumes we get the power predicted by the government tables. Hmm. I wonder.

I asked how much power my contact had produced in the 40 days since he had installed his system. He said 286 units. So across 40 days from late January to early March, he had averaged 7.1 units per day. Hardly the sunniest time of year, or the longest days. But the 2,900 units predicted for my system (the same size as his) represents only 8 units a day. Time will tell, but I suspect that the government tables are being a little pessimistic. 

Solar subtleties

Let's keep going with this blog while I have the interest.

I knew that the 41.3p FiT would only apply to systems below 4 kWp. I asked why I had been quoted for a 3.5 kWp system when another panel would increase its output further and still be under 4. Turns out that for systems rated over around 3.7 kWp, the electricity company have to carry out a feasibility study to check the cabling can carry the load. This may seriously delay the project and possibly cost heavily. OK. I'll stick with a 3.5 kWp system.

A note on terminology regarding panel ratings. A solar panel will produce electricity when light lands on it. More light, more power. The most power a typical panel can in reality generate will be when it is directly facing a very high Sun through a clear sky. The power then being generated will be its peak power and this is stated as Watts-peak. I've been quoted for twenty panels each of which are rated at 175 Watts-peak, or 175 Wp. Put 20 of these together and the rating of the entire system is 3,500 Wp or 3.5 kWp.

Of course, my system will almost never generate its peak power. It might approach it on the odd fortuitous late-June day. We get a lot of cloud in Scotland. That will be a big drop. Our roof pitch at the back of the house faces 20 degrees south of due west so will generate most electricity in the afternoon and will miss much of the morning sunshine. That's another drop. According to what I've read or heard, our location will cost 10% compared to the UK average. Our house's orientation will cost another 10%. Therefore, from government tables, we can expect to generate 2,900 units of power annually. It will be very interesting to see if reality matches the predictions. I can't wait to start taking daily measurements.

The starting point

It's been on my mind for decades that I would like to use the power of the Sun to generate electricity and now the opportunity has arrived. I'm going to blog my progress and see how it goes.

When I looked into it seriously in 2000, I was put off by the payback time. I remember electricity was about 7 pence per unit. When I worked it out, it seemed like it would take 120 years; 60 years when I took the then available 50% government grant into account. Now the situation has changed markedly. There are still grants available and politicians are falling over themselves to offer interest-free loans. Best of all, from 1 April 2010, a new system of reward for the microgeneration of electricity will come into operation - the Feed-in Tariff, or FiT.

As I understand it, FiT works like this. For every unit of electricity I generate, I will get 41.3 pence of tax-free income. This will be guaranteed for 25 years and will be linked to the RPI. If I use that electricity, then that is power I won't have to buy from the grid, saving me 11 pence per unit. Finally, if the system is generating power and I can't use it, I'll get a further 3 to 5 pence (depending on who you listen to) for exporting it. This completely changes the economics.

On a cold but sunny winter's day in late February, I visited a house where they have a large system. The owner proudly informed me he had generated over 15 units that day as the Sun was setting. That house had a 3.5 kWp solar photovoltaic array on its roof. I was getting interested in this.

There are a large number of hoops you have to jump through to take advantage of the grants and loans available for microgeneration and I'll try to relate here how I pick through them. First of all, there are grants of 30% up to a max of £4,000 available here in Scotland. [Later note: These grants were discontinued before I got to take advantage of them.] There are interest-free loans of up to £10,000 available but apparently the funds for these are nearly exhausted. [Later note: Maximum loans have been reduced to £4,000.] All this government largesse is only given if the powers-that-be are satisfied that you have implemented appropriate energy saving measures in your home. After all, the point of this intervention and incentive is to reduce the UK's emission of carbon. I think a discussion of that will be for a future blog entry.

The 41.3-pence FiT is only available on solar PV systems that have been retro-fitted onto existing houses and only up to a maximum of 4 kWp. Other rates apply for other sizes and other technologies for the microgeneration of power. OK. I would get a system that was slightly smaller than that. The 3.5-kWp system I had seen cost £14,000. It seemed I could get a grant of £4,000 and a loan for essentially the rest. OK. So what's first? I have to get a report from Energy Saving Scotland to check that I have mostly low-energy lightbulbs, have insulated my walls and attic and that my radiators are fitted with thermostatic valves. I do, I have and they do. I'm now awaiting a report arriving in the post that will clear the way for an application for a grant and a loan.

Meantime, I have got a quote for the system. 20 panels, each capable of 175 W peak and it's a shade over £14k. I've even used photoshop to simulate what they would look like on my rear roof. This is cool!