Has the Coalition Killed Commercial PV Solar?
With the on going uncertainty concerning the future of the UK Feed-in Tariff (FIT) scheme and the doubts being expressed by the Environmental lobby about the government’s true commitment to Climate Change and CO2 reduction compliance, many in the industry felt that, finally the bubble had burst on the rise and rise of the installation of domestic and commercial solar photovoltaic (PV) panels.
However, recently released statistics show that, despite the level of uncertainty and mood of doom and gloom within the industry itself, consumer confidence is holding up well. By the end of November 2011, a total of 230,000 solar installations had been carried out, with a combined 1,000KW of energy generation recorded by February 2012.
Answering opposition challenges during Parliamentary Questions recently, Ed Davey from the DECC (Department of Energy and Climate Change) stated that since the 21p tariff had come into operation, 10 weeks previously, more than 26,000 solar PV installations with a total energy capacity of 86MW had been undertaken – 1.7 times as many as for the same period in 2011. Despite accusations of “”cherry picking”" the statistics from certain industry lobbyists, the like for like figures do bear Mr Davey out – the weekly average for 2011 being 1,507 installations against 1,517 for 2012.
So for those businesses in the commercial, industrial or agricultural sector who are still considering whether or not to pin their green credentials to the mast and invest in a solar PV future, what are the prime considerations?
Do You Have What It Takes?
Any business considering solar PV installation to provide their future energy needs should take time to think about the basic requirements needed to get the project off the ground. Any large commercial solar array (from 10KW-100KW+) will need to be ground mounted, flush fitted, or use tilt frames. Some properties may find that they have to comply with council legislation or may be located in an area with heritage restrictions in place. Since April 2012, following an amendment to the PDR (Planning Department Rights), non domestic installations no longer have to apply for planning permission, which should certainly make life easier for the commercial sector. However, this legislation is subject to a number of regulations which must be adhered to:
Does your office building/factory/supermarket/barn actually face toward the preferred south-westerly direction needed for the most effective solar PV installations? Are you surrounded by woodland or in a built up area with a high density of shadow? Finally, will your roof be strong enough to support your solar PV array for the expected duration of its lifetime, namely 25-50 years? All these questions need to be asked and honestly addressed.
Another factor to consider is whether or not connection to the main grid will be possible for a large scale energy generation project. This will need to be verified by the DNO (Distribution Network Operator) – the worst case scenario being that additional transformers and power lines may have to be commissioned, all at considerable expense to the commercial applicant.
Can It Get Any Worse?
Prices for solar modules can vary considerable from just a few hundred pounds to £1,000 per unit. Costs will be dependent on the configuration and the power generation requirements you will need. It can take up to 1,000 solar PV modules to achieve the specified generation of energy, making the average UK commercial installation between £100,000 and £130,000 for a 50KW application.
The government finally published their response to the consultation on the FIT Compensation Review Phase 2A (phew!) on May 24th 2012. Certain considerations have been made to the green lobby but the end result is that, from August 1st 2012, reductions to the FIT will come into force.
The new rates for commercial installations are shown as pence per kW per hour;
- 10-50KW, – 13.5 kWph
- 50-150KW, – 11.5 kWph
- 150-250KW, – 11.0 kWph
- 250KW-5MW, – 7.1 kWph
They also announced that the duration of the FIT would be cut from 25 years to 20 years. Indeed, the one bright spot in the statement was that the Export Tariff (cost at which unused energy can be sold back to the grid) is to rise to 4.5 pence per kW per hour from the current 3.1 pence.
Keep Calm and Carry On!
However, before everyone gets too depressed and decides that the future for commercial solar PV is just too gloomy to consider, hang on in there – there is light at the end of the tunnel!
Even with the reduction of the FIT payments, the average commercial solar application could still expect to see an ROI (return on investment) of 8% over the course of the 20 year period. When you factor in the drop in price for solar technology and the highly advantageous deals being offered by many of the UK’s leading suppliers and installers the future begins to look a whole lot brighter.
A recent media investigation discovered that the average annual energy bill back in 2010 was £493. Using the DECC’s own forecast models, that amount will rise to £785 by 2030. Take into account the Bank of England’s target rate of 2% inflation and the true cost could be nearer £1,000!
We know for sure that the cost of energy delivered through non sustainable fuels is never going to reduce. The impact on the environment will continue to grow and the responsibility to deliver solutions will inevitably fall on our commercial and industrial sectors. So perhaps now is the right time to bite the bullet, take the advice and experience of a reputable solar PV provider and lead your business into a cleaner, greener future.
This article is by Ian Wright who writes for The Eco Experts which provides information for those who want to install solar panels in the UK. If you live in the UK and would like to find out more about getting commercial solar panels installed then check out The Eco Experts guide to UK commercial solar panel installers.