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Renewable Electricity Feed-In Tariff
19 April 2018
The Hong Kong Government has announced that electrical power generated by
renewable energy systems (PV) can earn attractive payments setting
the new feed-in-tariff.
What is a Feed-in Tariff?
The Feed-In tariff is the rate or money, per kwh of electricity,
paid by the electricity utility to the renewable energy equipment
owner, for electricity generated used RE, for example solar photovoltaic
or wind turbines, and sold back to the utility electricity grid.
The rates the utilities companies will pay is only
fixed until 2033 RTHK reports, and bizarrely is subject to
annual review. A sliding scale has been adopted, related to
the RE system capacity (most probably gross capacity):
- HK$5/kwh for less than 10kW
- HK$4/kwh for 10 - 200kW
- HK$3/kwh for 201 kW - 1mW
The above rates quoted were abstracted from the RTHK report.
Although the feed in tariff seems quite attractive, compared to present utility
charges (HK$ 1.1 - 1.3 kwh at 2018 prices) the terms are not, investment
decisions are based on the risk, therefore offering a term fixed rate
that can be adjusted annually will not help.
This announcement is a certainly a milestone, but unlikely to trigger increasing
Renewable energy systems as witnessed in Germany, because this deal carries
risk, the term is too short, and critically after the investment is made,
subject to review when your rate maybe cut.
The report does not mention regulating the fees the utility companies
charge for grid connection.
Source: RTHK Report 2018-04-17 HKT 17:50
Update:
We have been asked what is the problem with "....subject to annual review".
We query "annual review" because it create uncertainly, investments
are made on the basis of an expected Return On Investment (ROI).
If Government or utility can change the deal ebergy year, its
impossible to assess the viability of an investment.
For example, if Government or utility changes the 10 kw system
feed-in-tariff to 0.01 cent/kwh, the time to recover the cost of
the initial investment changes, it causes uncertainity.
About the Author
John Herbert is a
veteran chief engineer with more than 30 years international engineering experience, educated in
the United Kingdom, he has worked in the United Kingdom and then across Asia for more than two
decades engaged by international and local companies. He is a Hong Kong Registered Energy
Assessor (REA), a BEAM Professional, and stationed in Hong Kong.