Social housing tenants not receiving 'fair share' of solar Feed-in Tariff subsidy - NHF

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

Social housing tenants in England are not getting a "fair share" of the Feed-in Tariff (FIT) subsidy for solar panels and look set to lose out even more under current government proposals, new research shows.

Research by environmental consultancy Camco, commissioned by the National Housing Federation, estimates that low-income households have not yet received their "fair share" of the subsidy even though they have to pay a surcharge on their energy bills for it.

Camco’s research reveals that English social housing has received about 10 per cent of the domestic PV allocation against the 16 per cent which it should get based on its proportion of UK housing stock.

In 2009, the last date for which data is available, 762,000 social households were estimated to be living in fuel poverty (21 per cent of social homes), a higher proportion than in any other tenure. That number is believed to have risen sharply as a result of increased energy prices, and will continue to do so if social landlords cannot counter it through energy efficiency improvements subsidised by mechanisms like FIT and the ECO fund.

David Orr, chief executive of the National Housing Federation, said: “Unless the Government introduces a community tariff of about 30p, double what it currently proposes, there is little prospect in future that social tenants will be able to secure the potential £150 annual reduction in fuel bills such schemes offer.

"Yet the Government proposes slashing the FIT by more than half from 43.3p to 16.8p per kilowatt-hour (kWh) for social housing schemes."

Camco’s research indicates that in order for tenants to receive the free electricity that may help them out of fuel poverty, the tariff would need to be at least 32.4p/kWh – even then the returns for housing associations would be unlikely to cover the full costs of debt financing.

Mr Orr continued: “We need action now to deliver on Ministers’ commitments to tackle the increase in fuel poverty which is resulting from spiralling energy bills.

“They need to look again at their proposals on solar PV to ensure a good future pipeline of schemes by social landlords which will deliver benefits to those on low incomes.  

“Our research spells out clearly the economic fact that without doubling the tariff they propose for social landlord schemes, it is most unlikely there is any future for solar PV in social housing. The effects will be devastating for low income and vulnerable neighbourhoods as, due to the up-front costs of installation, social landlords were the only organisations likely to deliver these savings to these communities.”

The FITs scheme has been in place since April 2010 to promote the take-up of small-scale low carbon electricity technologies. Under the solar PV scheme a tariff is received for all electricity that is generated to help pay back upfront costs of installation.

Housing associations and the solar PV sector had expected existing tariff rates to run until April 2012, but on 31 October, with six weeks’ notice, the Government proposed to slash the tariff by more than half for multi-property schemes. This has led to at least 27,000 housing association schemes for predominantly low income and vulnerable residents being cancelled or postponed.

The Camco study demonstrates that the proposed tariff of 16.8p/kWh is too low for viable social housing investment. This is primarily because social landlords investing in PV depend entirely on the FIT. Unlike owner-occupiers, they do not benefit from the value of the electricity produced, which goes direct to the tenant.

A minimum tariff of 32.4p/kWh is needed to ensure that the social housing sector continues to invest in PV. A tariff of 37p/kWh would enable off-balance sheet debt financing at 6% and could deliver the total social housing market potential of PV capacity, estimated currently at around 30,000 homes.

Total domestic PV installations in the UK so far amount to 320MW. Camco’s research estimates that 34MW or 10.5% of PV FITs have gone to English social housing. As English social housing constitutes 16% of the UK housing stock it has not received its fair proportional share.