Can solar power survive in a world without feed-in tarrifs?

Ben Harrison, Managing Partner, Mypower benharrison@mypoweruk.com

Since 2010, Government feed-in tariffs (FiTS) have provided a financial incentive for generating energy from renewable sources. Overall, the scheme has been credited with increasing demand for clean energy which, in turn, helped to stimulate investment into research and development. It’s perhaps not surprising, therefore, that many in the renewable energy sector were dismayed by the Government’s abolition of FiTS for new renewable energy schemes registering after 31st March this year. They predicted the lack of FiTS will cause a crash in demand for clean energy at a time when the Committee on Climate Change has recommended a target of net zero carbon emissions by 2050. Yet closer inspection reveals the situation is not simple and commercial-scale roof-top solar was already beyond the need for subsidies. At solar power company, Mypower (www.mypoweruk.com), we believe the benefits of this type of solar power will become obvious to facilities’ managers now the cloak of feed-in tariffs has gone.

Mypower has been designing and installing solar PV systems for SME’s, corporates and farmers (as well as Gloucester Cathedral) since 2010, and we believe removing the FiTS will create a stable and market driven demand for roof-top commercial-scale solar energy. Solar power has been competing successfully in the open market with ‘conventional’ energy for some time now due to its significant advantages – both financial and practical.

Our experience makes us confident the corporate sector will view the absence of feed-in tariffs as a positive move. Solar power is now uncoupled from Government policy, removing uncertainty from what is, in business terms, essentially a pragmatic decision. The possibility of new policies altering FIT payments and contracts made companies extremely cautious and stay with existing supply from the National Grid. A perfect example was the 65% cut to tariff payments introduced by the Government in 2016, leading to widespread negativity in the marketplace towards the subsidies. The associated paperwork created a perception of bureaucratic complexity, whilst some companies’ wouldn’t consider taking subsidies as a matter of principle. So, all-in-all, during the lifetime of the FiTS, many companies dismissed solar power without exploring the facts.

The removal of the tariffs has removed these mis-conceptions, revealing how solar power can ease the workload of the facilities’ manager: attractive financial savings, minimal maintenance, ease of installation, and straight-forward monitoring. With no moving parts, a solar PV system needs little maintenance and a digital display, which can be installed wherever needed, provides a constant picture of energy production.

It’s the financial benefits, however, which enable solar power to trump energy from the National Grid. ‘Surely that’s not possible’ is a common reaction we encounter, partly due to the ‘hippy’ image of times past still steadfastly clinging on. Indeed, it would’ve seemed impossible a decade ago, but technological advances coupled with the practicalities of supply and demand have sent prices tumbling and returns soaring. Solar PV systems are now fifty percent more efficient and two-thirds cheaper than ten years ago. Non-domestic roof-top installations are currently generating electricity at around 4-5p/kWh compared to 14-15p from the Grid, even without feed-in tariffs. Plus this price is fixed for approximately twenty-five years, the estimated lifespan of a PV system. The final factor in this equation is thanks to Mother Nature: peak solar electricity generation happens during the day when the energy demands of offices, farms, commerce and industry are at their greatest. An obvious statement, but one worth making as it’s this practicality which enables a significant proportion of grid-supplied electricity to be replaced by clean energy. Add all this together, and businesses investing in commercial-scale solar can expect a ROI of 14-15%.

A few less obvious advantages are also nestling behind these headline ones – energy security, for example. Solar power from roof-top PV systems generated on-site enables a business to take control of a significant part of its electricity supply, maximising the energy available, and reducing dependency upon both the ageing National Grid and on electricity imported from other countries.

The number of past customers whose solar PV systems outstrip expectations give us reassurance that commercial-scale solar will ride the tide of change with ease. Walsh Mushrooms near Evesham supplies 17% of market demand in the UK and Ireland for this ubiquitous food ingredient. Reducing the company’s environmental impacts in all operational aspects led to the installation of a solar PV system at its Evesham packing facility which uses 1,100,000 units of electricity/year. The first PV system contracted was for 149kWp of solar but within a short space of time, the company’s confidence in the system led to the allocation of a 2nd area of roof space for a PV system supplying 99kWp. Post-installation, the systems outperformed the predictions by 3.3% in the first two years alone. When a new building was erected a short while later, a solar PV system for 178 kWp was included in the building specification, providing a totalled installed capacity at the site of 426kWp.

All these systems together now produce 30% of the Evesham facility’s electricity needs and have reduced CO2 emissions by 120 tonnes/year. During the estimated 25 years of its lifespan, the PV system should produce 8.1 million units of electricity equating to total projected income and savings of £2.5 million after indexation. Taking the capital and O&M costs of the system and equating this as a cost per unit of electricity generated, the resultant 5p/unit fixed for 25 years is some 65% cheaper than today’s Grid-supplied electricity.

As FiTS-free solar power only began at the end of April this year, it still remains to be seen just how this will affect the demand for this form of endless energy. With the Government’s recent declaration of a Climate Emergency, we obviously hope it will be negligible and the signs so far are good – the order books are at their strongest since we began trading in 2010 and new enquiries for significant sized systems similar to Walsh Mushrooms’ are being received daily.

Tel: 01242-620894, 07793 579047

Related posts

%d bloggers like this: