LONDON — In a move that may herald a return to large-scale solar development in the UK, Hampshire-based social housing association First Wessex and Welsh renewable energy developer Dulas have agreed on a plan to put solar panels on 800 affordable homes across the south of England.
Work will begin this month on the 2.5 MW, £4.3 million (€5.2 million) project, which will be completed within two years, said James Cass, business development and sales manager at Dulas. Custom-made Hyundai solar panels will be used, he said.
According to social housing news site Inside Housing, many UK housing associations abandoned plans to install solar PV on their tenants’ roofs after the feed-in tariff (FiT) was cut from 43.3 p/kWh to 21 p in late 2011, believing solar was no longer a viable option. With the FiT cut, housing associations faced losses of up to 22.3 p/kWh.
But the dramatic global fall in PV system costs since then – a drop of more than 50 percent – has enabled companies such as First Wessex to make a new business case for solar.
“We were aware that [solar] prices had dropped, and we had long wanted to do something with PV,” said Paul Ciniglio, First Wessex’s sustainability and asset strategist. “We were one of the housing associations that didn’t move at the time tariff rates were at their peak, but we were still keen to do projects.
“We tested the market through a tender excercise, which came back proving that solar is viable,” he continued. While PV is “not as lucrative as it was” before the FiT cut, he said, and “it’s still quite tight financially,” it can work. “We put PV into our business plan and were pleased to find that it would pay back sooner than expected, largely because of the reduction in supply and installation costs,” he said.
And for social housing associations the business case may involve more than profit. “We don’t really look at this purely as a moneymaking exercise,” Ciniglio said. “Of course we’re looking at [a solution] that does pay back for itself, but it also does a lot of good for our residents. For a housing association this should always be part of the business case.” As well as reducing electricity prices for tenants who may be in fuel poverty, key to the choice of Dulas was its plan to hire jobless young people from the community and teach them the solar business, Ciniglio said.
First Wessex expects its solar investment to pay for itself in 12 years, with a 9.3 percent return on a FiT rate of 14.9 p/kWh. After the first 25 PV systems are installed, Ciniglio said, the rate will drop by 10 percent to 13.41 p/kWh because the company will then be classified as a multi-system installer.
Housing associations could be in a good position to spearhead a return to PV due to their ability to leverage economies of scale. First Wessex “looked at what we could get for our money,” said Ciniglio, “and it was better than we thought it would be. Part of that is the quantity that we’re buying.”
The company did have a brief scare during the EU-China solar trade spat, he said. “Having got the tender back, there were anti-dumping levies, so there was a time when module prices were increasing again,” he explained. “But we were able to find an alternative product that [Dulas] could deliver at the original tender price by switching from monocrystalline to polycrystalline panels.”
Ciniglio said First Wessex has “had a lot of enquiries from local authorities and other housing associations, asking what we’ve done and how it’s worked.” And development is underway: among others, Bristol City Council has undertaken what it says is the largest solar project in the UK.
“The market needs a bit of confidence,” Ciniglio said. “When the FiT got slashed people thought they’d missed the boat, it was too late, solar will never work now – but [this contract] proves that the solar market is still open for housing association business.
“I would encourage [other housing associations] to test the market, go through a tender. If it still pays back, then why wouldn’t we do it, really? You need to take a long-term investment decision, which is what we’ve done,” he said.
Cass believes that social housing will be a growth area for solar PV in the coming years. “In the next few years a lot more PV will be made available on social houses via housing associations,” he said. “PV has obviously been a volatile market to be in, but over the next years more and more people will realise that roofs are an under-utilised resource. If you’ve got a roof, you may as well put PV in place.”
Lead image: solar panels on a domestic roof in England, via Shutterstock