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Navigating FiT’s Shifting Sands

We all know that 18 months is a long time in politics. The same can now be said for the renewable energy sector.

 

After heralding the introduction of feed in tariff (FiT) subsidies as a key driver to meeting renewables targets, it appears we were in fact driving too quickly for the liking of many a treasury department.

 

After ‘explosive’ growth in the Solar PV installation market, Spain, the UK and many Australian state governments have called a halt to, or have dramatically reduced, feed in tariffs subsidies.

 

But the death knell for this fledging industry is not sounding just yet.  True, in many regions the recent surge in rooftop installations was underpinned by FiT subsidies, but the rapidly falling price of PV panels also played its part. And with China now ramping up its PV program, the cost of these panels is set to drop further. 

 

Demand will continue to rise, and with the UK government continuing to support household installations rather than sites with more than 500kW generation capacity, utilities there need to plan ahead.  In Australia, we see utilities already having to cope with a ten-fold increase in the number of FiT suppliers in two years, with over 200,000 generating households now feeding into the grid.

 

This rapid growth has not come without challenges.

 

Utilities and retailers are, by and large, set up to sell energy to businesses and consumers. But many find they now lack the back office systems to buy distributed energy from those very same consumers.

 

Each energy purchaser or ‘recipient’ needs to accurately capture the additional information required from each generating household and kick off the necessary workflow and documentation trail. New fields, new wizards, and new processes all need to be set up and data flow realigned. Adapting rigid CRM systems to cope with these new demands is of course possible, but proving to be time consuming and expensive.

 

 And of course, there is an impact on billing systems too. The correct tariff needs to be allocated according to the size of installation and the type of generation. Payment calculation may use generation metering data or a combination of a fixed charge and a figure based on a total percentage of generation (common in the UK).  Finally, a self billed invoice or recipient created tax invoice (RCTI) needs to be issued by the purchaser.  These invoices in particular are the cause of many legacy billing systems headaches, as GST/VAT calculations and tax department approved invoices are proving to be some of the most complex areas within embedded generation.


Many are opting for very manual and separate processes to manage their FiT customer base. But this approach is leading to a disconnect approach to customer service and will become increasingly unfeasible as the number of households enrolling in the scheme increases.

 

Another tack may be to invest in a ‘FiT ready’ billing/CRM system that is flexible enough to handle the changing nature of this market but is already preconfigured for current regulation and payment/tax calculations. Those designed using web services should be able to quickly integrate with the utility’s current CIS and CRM systems.  Utilities, and their front line staff, will have a more complete picture of each household as both a customer and supplier, while enrolments and invoice calculations are automated. 

 

Distributed generation may be heading for a stall after coming off the grid a little too quickly. And of course subsidies and renewables targets will continue to move with the ever changing political wind.  

 

But fast forward another 18 months.  And the price of solar panels has dropped another 30%. *

 

Your 2011 decision to prepare your operations for the longer term growth of distributed generation is already looking like time and money well spent.

 

*As reported by the Guardian in June 2011, Ernest and Young predict the price of solar panels will drop from $1.50 (US) in 2011 to $1 in 2013. (Per unit of generating capacity)

Filed under: FiT Solar PV Solar panals feed in tariffs
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