The Governments FIT review 2b of non PV renewable energy generation has thrown up an interesting aspect. One of the weakness of having these stepped tariff rates is that they have some unintended consequences. e.g. it can encourage you to generate less renewable energy because you make more money by down sizing your system to fit into the next tariff band. This is very true with PV but it has been bought home in a big way for us on the Snowdon hydro. We are in a few weeks of placing the order for the new turbine and our engineers have been number crunching around the new FIT 2b 100kw to 500kw band of the Feed in Tariff …and it makes interesting reading
1. The hydro we intend to build which has undergone a long consultation and methodical abstraction negotiation to maintain habitats and visual amenity. This is what it looks like
- 614 kW, 450 l/s. Energy 1839 MWh, Average annual income £314k based on 12.1p FIT plus 5p energy export, total 17.1p/KWh.
2. But if we reduce the size of the system and its output this means –
- 500kW: 366 l/s. Energy 1659 MWh(10% less), average annual income £340k based on 15.5p FIT plus 5p export, total 20.5p/kWh.
We also estimate capital savings on intake (smaller structure, less screen) ( £5-7k) , smaller pipe 500mm and 560mm rather than 560mm and 630mm (costs reduce from estimated 131k to 93k, so £38k saving), smaller turbine and generator, powerhouse pipework– estimate £20k) smaller powerhouse, outfall etc – another £5-10k.
Overall capital cost savings of around £70k and an additional £26k per year income. This might need £3-4k of redesign costs etc.
Overall. Less cost and more profit but also less renewable energy produced. Interesting! As a project team we have decided to stick to plan A. At the end of the day we are here to generate renewable energy and keep in the spirit of the feed in tariff (don’t think future generations would thank us for thinking short term profit…sound familiar?) . Long term the additional 180MW pa will also we feel make more income. (the price of electricity does not seem to want to go down) and to replace this lost energy generation capacity for example we would need another 200kw of PV installed which would be a bit silly if you could generate it cheaper on the system that you intend to build anyway. We are also working on ‘sleeving’ this energy , which should see the income differential (between the 500kw and 614kw) reduce (more on sleeving when we have i hope finalised the mechnaism)
I wonder how difficult it would have been to develop a sliding scale FIT rather then these precipitous rate drops which can encourage you to produce less renewable energy at certain scales?
(PS this new band can encourage you to go bigger on the 100kw turbines but its all relative since we are talking of loosing a whole 100kw in moving down but you may only be looking at a small percentage increase at the smaller scale turbines)