All is not lost: Five tips for social landlords developing solar PV projects

Published by Jon Land for 24dash.com in Housing and also in Environment

Matthew Rhodes is MD of Encraft, a leading independent consulting engineering firm specialising in microgeneration, on-site renewables and low carbon buildings for the social housing sector.

Although some social landlords tried to take advantage of the so-called “free-PV” schemes which were brought to a grinding halt on Monday by the Government announcement on Feed-in Tariff (FIT) changes, most of those who we have been working with for the past two years chose to take a more considered and informed approach. Often they have been developing mixed public/private models which promised to maximise local economic benefits as well as delivering significant cost savings to fuel poor tenants and predictable revenue streams to the social landlords.

One of the worst aspects of this week’s FIT announcement is that organisations who have taken this more thoughtful approach stand to suffer most, because their development times are often longer and they may be part way through installation programmes, already tendered and commissioned, that cannot complete before the December 12 deadline.

However, all is not lost.

Here are five practical things social landlords should be doing in the light of this week’s announcement.

1. Review and prioritise any current procurement and installation programmes for solar PV you have underway.

Make sure you target installations on sites with maximum yield potential and lowest forward maintenance costs. Where contracts allow, ensure installation contractors are incentivised to complete all installations well before December 12 and all paperwork is completed. Require them to provide you with a detailed installation plan if you don’t already have one, and monitor progress daily. Check forward procurement schedules and amend delivery dates where possible, and contact installers to ensure any bookings will be honoured. If necessary, call in an expert project rescue and optimisation team now to support this activity and ensure you get maximum benefits in the next six weeks.

2. Ask your consultants or advisers to remodel any financial projections based on the new tariff rates and don’t panic and stop all work – many projects will still make financial sense in the new environment.

The costs of stopping some projects may outweigh the benefits. In January installation labour for solar PV is likely to be cheaper again, and Encraft has already found projects that will deliver returns of 8-9% in London under the new regime, at current installation costs. If your current installer can’t remodel their projections, Encraft can do this for you. We can also provide accurate market rates for installation labour and put you in touch with companies who can help.

3. Start thinking about how the work you’ve done to develop solar PV projects might be useful in developing Green Deal and RHI projects.

For example, solar thermal systems are driven by the same fundamental factors as solar PV (location, shading, orientation) so your solar PV survey data can also be used to design solar thermal projects. The incentives for solar thermal under RHI and Green Deal are potentially attractive. You can start modelling this now, and be ready to take advantage of the Green Deal from October 2012. Experience from solar PV suggests that those who are prepared best for these incentive schemes benefit most, because the Government can’t be trusted to be consistent.

4. Keep in touch with potential funders, and don’t lose any legal agreements and funding advice you’ve gathered as part of developing solar PV schemes.

Green Deal local delivery vehicles are likely to look very similar to many of the better mixed equity solar PV models (for example, where the social landlord formed a joint venture with an installer and specialist project developer). So any work you’ve done in this area will not be wasted. Now is the time to take stock of what you’ve learned and start thinking about the best way for you to position yourself to take advantage of the Green Deal. Many of the mechanisms will be the same.

5. Learn the lessons of tenant engagement and community ownership that came out of the solar PV experience.

Many solar PV projects failed to take off because the project developers were greedy, or forgot to engage with tenants, or took community buy-in for granted. Green Deal projects will require equal levels of community engagement to secure maximum benefits, and social landlords should look for every opportunity to involve tenants and communities in project development. Solar PV will always be one of the easiest technologies for people to understand, and provides a great route into tenant engagement, so think laterally about making best use of systems you are committed to installing even after December 12.

For more information about Encraft, visit www.encraft.co.uk or contact 01926 312 159