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Solar PV for Councils – looking ahead for the next year

Chris Jardine Blog: Chris Jardine

As an approved supplier on Fusion21’s Retrofit Framework (Lot 6, Photovoltaic Installation), Chris Jardine, Technical Director at Joju Solar, has written a guest blog about the future of solar photovoltaic solar panels.

Read on to find out more, and click here to view more detail about our specialist Retrofit Framework designed to support energy efficiency improvements on domestic and commercial properties.

Solar PV installations are still on the agenda for many councils who are interested in developing renewable energy projects. Solar offers a proven way of reducing energy use and carbon in buildings and is therefore a useful strategy to help councils meet reduction targets, as well as providing an ongoing revenue stream.

Whilst there has been a slowdown in the number of projects being developed after the feed-in tariff cuts of January 2016, solar PV is still extremely cost effective when deployed in the right way. For sites where electricity use is high during the day, any solar electricity is used directly on site and therefore gives a direct saving on electricity bills. As such, solar installed on the council’s own buildings and schools give the strongest returns, with paybacks of less than 7 years (and rates of return on investment equating to 15-20% per annum). Sites with low onsite consumption during the day, such as social housing are less economic under current subsidy support, so we recommend focussing on buildings with more ‘commercial’ type usage patterns.

It is important to note that by far the majority of benefits from solar PV come from on-site use, saving a typical 10p/kWh from bill savings. Feed-in tariff support, by comparison, is of the order of 2p/kWh for every unit generated, so it can be seen that this is much less significant (despite the greater attention this gets). Feed-in tariffs are scheduled to end completely at the end of March 2019. Whilst FiTs are comparatively less important, and we still expect to see viable projects even after they are removed, it would be prudent to install projects within the next year. Development timescales can be long for larger scale PV projects, so we advise starting the process now to be sure of hitting the March 2019 cut-off point.

In addition, solar PV projects are now eligible for support via Salix Finance’s funding for energy efficiency projects in the public sector. This can be either on an individual project basis or as part of a Salix Recycling Fund. The latter provides 50% matched funding (ranging between £100,000 and £1m, depending on the organisations size) to public sector organisations including councils. The benefit of the Recycling Fund is the financial savings can be returned to the fund to be used again for further projects. As such, this is a way of effectively reducing the up-front capital investment by half and therefore reducing paybacks by the same amount.

Oxford City Council recently installed 125kWp of solar PV on one of their depot buildings. This scheme used 89% of generated electricity on site, thereby being designed in accordance with the optimal design strategy we outline above. They used their existing Salix Recycling Fund to part fund the scheme, thereby improving the economic case even further. Paul Robinson, Energy and Natural Resources Team Manager at Oxford City Council said “The new Salix Recycling Fund has been invaluable to our energy strategy. We have used the fund since 2008 and more recently it has provided a way for us to continue to increase the size of our renewable portfolio, and as we return the funds, we will be able to use them again for further projects.”

In summary, solar PV can still be used to develop cost effective carbon reduction projects for councils if used on sites where the solar can be used directly in the building. Feed-in tariffs are helpful, but not essential to this. In addition, Salix funding opens up possibilities for improving the economic case for individual projects and portfolios of installations.