COMMENT
With proposed changes to the UK's solar PV Feed-in Tariffs (FiT) high on the agenda of many solar PV companies, most organisations are wondering if installing solar PV will still makes economic sense (if and when the tariffs are cut), and what the long term effect on the industry will be as a whole.
The same topic was high on the debate agenda at Solar Energy UK, with the industry itself is questioning the viability of installing solar PV come 2016. Reassuringly, the overall outlook is a positive one, especially for the commercial PV market.
Most financial analysts agree that installing a solar PV on a company’s factory or warehouse roof is still a highly cost effective undertaking, and continues to make sound financial (as well as environmental) sense.
The Government has shown its continuing support for solar PV on commercial roof tops by relaxing planning laws and separating roof-mounted systems from ground mounted PV arrays when it comes to FiT allocation. The FiT band classification is also ring-fenced to stop rooftop systems from being unfairly digressed.
Why continue to invest in solar?
Solar PV remains a great proposition for UK businesses with suitable roofs. Commercial solar PV is a long term investment which has a guaranteed, RPI-linked 20 year income, backed by the British Government. Feed-in Tariff incentives have reduced significantly over the past five years, yes. However, the cost of a PV system has also come down by around 70% in the same period.
There are also significant savings to be made on energy costs, now a separate line on every company’s balance sheet. Plus there is the green consideration - also a significant factor on every company’s agenda – reducing carbon emissions.
Any organisation’s Corporate Social Responsibility (CSR) policy is an essential part of their value proposition and a pre-requisite when bidding for new contracts,. This is especially so when seeking to attract new customers, business partners or appealing to public sector organisations.
Consumer pressure dictates a continuous effort to lower CO2 emissions. Producing and using renewable energy power sources are one of the most cost-effective ways of enhancing a company’s green credentials.
The payback or return on investment period currently stands at about seven years for a typical commercial solar PV system. For those companies that currently lack the capital for the initial investment there are many UK providers offering Power Purchase Agreements (PPAs) that can make a commercial Solar PV project not only a viable but a realistic proposition.
Others, including BayWa r.e. Solar Systems Ltd, offer full funding for the installation of PV systems. This allows for commercial properties to benefit from the green credentials of using solar power for their premises, as well as seeing reduced electricity costs.
Our commercial solar PV funding solutions are designed to help installers sell commercial-scale PV systems into companies that perhaps could not otherwise afford them. The funding provided by BayWa r.e. allows businesses to benefit from long-term financial savings by generating their own electricity, with no capital outlay.
How it works:
- Working with high quality PV installers and supplying only high quality BayWa r.e. Solar Systems PV equipment, a solar PV system is installed on the roof of the commercial property;
- The fund then monitors and maintains the system and equipment for 20 years, at no cost to the end user;
- After 20 years, ownership of the system transfers to the building owner so that they receive the full benefit for its remaining life, around a further 15 years.
BayWa r.e. installs the PV systems entirely free of charge because:
- It has access to funding specifically allocated for the installation of solar PV systems on commercial rooftops;
- The funds receive a payment from the utility company which is backed by the government under the Feed-in Tariff scheme that was established to incentivise the deployment of renewable energy technologies;
- The building owner pays for the electricity that the system generates which is then consumed locally. The rate the building owner pays will be significantly lower than the standard electricity tariff and fixed to the RPI for 20 years;
- As the building owner and the fund both share in the benefits from the solar PV system, it is in everyone’s interest to ensure it operates effectively and in line with expectations and forecasts.
So while the Government and the solar industry continue to debate the proposed tariff changes, with other reasons to invest including CSR, there are still genuine reasons for hope for a long future for solar in the UK.
ABOUT AUTHOR
Ian Draisey is Managing Director of BayWa r.e. Solar Systems Ltd, one of the UK's leading wholesale suppliers to the solar PV installer network. Head-quartered in Machynlleth, mid-Wales, it is a division of BayWa r.e. renewable energy GmbH.
FURTHER INFORMATION
www.baywa-re-solarsystems.co.uk or contact BayWa r.e. Solar Systems on 01654 700777.