Sustainable Solar Strategies
Registered Social Landlords (RSLs) have an obligation to develop sustainable strategies to meet their long-term social aims of providing community homes.
For a while, subsidised rooftop solar photovoltaic (PV) generation provided an important and novel income stream.
• Long-term subsidies provided a predictable and secure income
• Free energy for tenants addressed fuel poverty and met social aims
The sudden and dramatic reduction in government subsidy decimated many of the operators in the market and many installation programmes were cut short or never started.
The issue of fuel poverty is still very real. Many RSLs continue to install solar PV on their new build homes. In Scotland, solar PV is considered essential by some social landlords to comply with new environmental standards.
After a short spell in the spotlight, solar PV has fallen out of fashion and, for securing long-term sustainable income, RSLs are focused elsewhere. Some RSLs don’t claim currently available subsidies on newly installed PV because they believe that the administration costs outweigh the returns.
Yet with the correct systems in place, the administration of these income streams can actually be managed cost-effectively with minimal resources.
Recent activity by RSLs reveals examples of major new property investment strategies. These include mergers, partnerships, land bank acquisitions and the appearance of new Real Estate Investment Trusts. Similar strategies are emerging in the solar PV market (e.g. Lightsource’s £600m Solar Buyback). This presents opportunities for RSLs with streamlined asset management systems in place. Systems that seamlessly handle Feed in Tariff (FiT) claims and payments, provide timely, reliable data which optimises operation and maintenance (O&M), minimising downtime, accelerating speed of response and maximising income.
A high-level panel of solar investment specialists at this year’s SFIE (Solar Finance & Investment Europe event 31/01/17) concluded that enhanced data collection and monitoring is becoming increasingly key for owners of UK solar assets. “It’s not just about data, but how you handle that data,” a really complex issue for solar to manage. (Tobias Bittkau, Managing Director, BayWa r.e. Operations)
With reliable, proven, management systems and output data, a solar PV portfolio can provide maximum returns, become a valuable asset for sale or act as the basis for an acquisition strategy.
Energy Sector Upheaval
A team of financial specialists working with Imperial College have released a report of their latest evaluation of the energy sector (Expect the Unexpected – Feb 2017). In it they show that the demand for coal and oil will peak as soon as 2020 and the cost of Battery Electric Vehicles (BEV) will fall below that of Internal Combustion Engine (ICE) vehicles in the same year.
The report goes on to indicate massive upheaval in global energy markets.
• Solar PV could supply 23% of global power generation in 2040 and 29% by 2050.
The UK has EV targets out to 2050 but we are already about five years ahead of that in terms of vehicle numbers:
2016 80,000 EV
2020 700,000 EV
2025 4,000,000 EV
2035 10,500,000 EV
The report reveals a much higher growth rate in EV sales than previously anticipated. Recent events are illustrative of the forces already at work and add further credibility to these revelations:
• The diesel emissions scandal engulfing car manufacturers
• London T-charge Oct 2017 and Ultra Low Emissions Zone from 2020
• Westminster Council’s 50% higher parking charges for diesel vehicles
• Increased air quality concerns (EU air quality laws are being flaunted in more than 130 cities across 23 of 28 member states – European Commission 06/02/17)
• The UK Government’s mooted diesel scrappage scheme (February 2017)
• Eon’s Aura system, linking domestic solar and battery storage, is proving hugely popular in Germany and will be coming to the UK shortly
These changes will lead to greater demand for electric energy at home (charging) and will put additional strain on the grid. With the advent of local storage (in many cases provided by increasingly available, pre-used EV batteries), Solar PV is set to become an ever more prominent feature in the energy landscape.
This is highly relevant for the solar PV market and for Multi-Site Generators (MSG), particularly RSLs where rooftop solar PV portfolios exist with their output capacity positioned alongside points of use. Cost effective local storage solutions permit maximum consumption of PV derived energy, providing a virtuous 100% solution for many households.
Retrofit alongside existing meters or stand alone with new build, twin element meters record half-hourly solar PV output. Wireless communications enable offsite delivery of a rich data feed. This permits analysis of the solar PV energy consumed on the premises, the amount exported to the grid and the amount consumed from the grid alongside other configurable data options. This advance facilitates O&M improvements and allows functional engagement with tenants to help them maximise use of their ‘free’ solar energy. At the same time, the RSLs continue to receive an export tariff based on an assumed 50% of consumption.
Small Steps = Big Gains
Envisage a portfolio of 500 solar PV installations producing a current income of £250k pa and delivering an assumed tenant benefit of £150k pa. An uplift of 1% in income (or cost saving) over the lifetime of the project equates, in simple terms, to a £50,000 benefit and a 5% improvement (which is not uncommon), five times that figure. With a portfolio of 5,000 installations that might indicate a lifetime saving of £25m! What seem like small incremental improvements can make a startling difference over the longer term.
Are you unFiT?
Some questions for you to consider:
• Has your solar PV portfolio been forgotten?
• Is your portfolio managed efficiently?
• What savings might be made by improving data feeds?
• Are you carrying out the correct analysis?
• Is the portfolio managed to maximise returns?
• Is the management prudent?
• Are you in control?
• Are you using the correct technology efficiently?
• What is your future sustainable strategy?