During the worst quarter of the year for sunshine, Nov 25th to Feb 25th, the system delivered an (annualised) return on capital of 1.6%. Naturally I expected better in the spring quarter Feb 25th to May 25th, and I was not disappointed. Indeed we’ve had the sunniest spring for a long time, and in the second quarter the system delivered around five times the output for the winter quarter. On that basis, we’re looking at an annualised return of 5.1% over the first six months, or 8.4% over the spring quarter.
I estimate that by the year end we could be looking at an annual return of around 5.5%.
But that is based on the absurdly over-generous “Feed-In Tariffs” offered at the government’s behest by the power companies — which of course are reflected in higher electricity prices for everyone else.
A unit of electricity typically costs around 3.5p to generate, and households can buy it straight from the power company for typically 10p a unit. Yet the subsidy on home-made solar power amounts to close on 50p a unit.
So my projected annual return of 5.5% based on the feed-in tariff is really just 1.1% if you rate it at the 10p purchase price off the grid, and only a derisory 0.39% based on the raw production cost in a proper power station.
The whole Feed-In Tariff structure is hugely wasteful and pointless, and the only good news is that the rate of Feed-In Tariff will be scaled back from March next year (for new installations), while the government is actively looking to curtail subsidies for large-scale units.
This scheme fits in with the UK’s ruinous plans for an 80% emissions reduction by 2050 (which we could only achieve if we returned to an agrarian society, where every man had one acre and a cow — and even then the emissions from the cows would be a problem). We are actively incentivising the most expensive and least efficient forms of energy generation, and landing ourselves and our children with the world’s most expensive electricity. Not a smart move.