Government cuts to the feed-in tariff have made commercial rooftop solar deployment a more attractive proposition, according to a UK asset management firm.
Aberdeen Asset Management's head of responsible property investment Dan Grandage claimed that wider deployment of solar panels on its properties had previously been held back by the constraints imposed by the subsidy programme. This included those imposed by the accreditation process, which a representative of the company claimed had slowed deployment down considerably.
Speaking at this week’s Ecobuild exhibition, Grandage also claimed that the tariff bands had kept installations small in order to attract a better FiT rate, despite the positive benefits of a larger installation.
“The really key point I think is not having FiTs will mean we're not constrained to try and match the FiT bands and actually we could maximise [deployment]. It was constraining us in terms of what we were installing and we have had situations where it would have given us a tick in the box for BREEAM but we've not then maximised it,” he explained.
“That's gone and I think going forward we will be installing far more panels within our refurbishments going forward.”
The removal of constraints associated with the FiT also means that solar panels can be used more widely to improve the energy efficiency rating of buildings. Under FiT regulations, a building must already have an EPC rating of D or higher to receive payments, making solar installations less attractive as an energy efficiency measure.
“There was a slight conflict previously because to get the FiTs you needed to have a well-rated building in the first place,” Grandage said. “That's removed so we will actually be able to have panels improving our buildings when we might not have been able to justify that previously. That's quite a key point to keep in mind going forward.”
The ability of solar to be used more commonly to improve an EPC rating of a commercial building comes at a potentially important time for the industry as new standards due in 2018 will see landlords unavailable to lease properties if they have a rating below E.
According to research published by Cushman & Wakefield earlier this year, a fifth of commercial buildings currently would not meet this standard, with a further 19% currently rated E at risk of falling below the standards if the EPC rating system is improved.
Grandage said: “A really important one for us as an asset management and property investment firm is actually the ability to improve an EPC rating. The minimum energy efficiency standards are coming in so by 2018 as a landlord we wouldn't be able to let properties if they are F or G. So typically – this is not a guarantee – I think we can actually improve the rating a couple of bands [with soalr]. So that would very neatly take us out of that danger band and move us into the safer area.
Grandage also claimed the continuing fall in panel costs has and will continue to offset the loss of FiT revenue, while the need to pay for consultants and other costs associated with accreditation under the subsidy programme have also been removed. In addition, if efforts to remove EU limits on Chinese imports of solar panels are successful, prices will drop further.
“We suspect that a 5-7% return on investment is a realistic thing if a lot of things come to play at the same time, maybe even higher,” Grandage said.
The viability of solar on commercial and industrial rooftops was supported by Ross McGuiness, commercial sales executive of Solarcentury, who said interest in the technology was high.
“There are funders queueing up with us at the moment to fund large scale commercial rooftop PV projects and they want to fund them without incentives. They want to move away from dependency on feed in tariffs,” he told Solar Power Portal.
“If they can get the feed-in tariff and fund the project at the same time, that's even better but they have the ability at the moment to fund projects with a power purchase agreement and deliver them to the clients. I think commercially it’s viable – not on every case but I certainly think if you've got a building which has a high consumption of electricity and you're paying anywhere around 11p/kWh, you should still be looking at an return on investment. If you can secure the FiT rates that we have at the moment, you should still be able to secure a return north of 12%.”
He added: “I know there have been a lot of doom-mongers around the PV industry in the last six months or so. I don't think anyone in Solarcentury would subscribe to that. It’s certainly been very buoyant and busy this year at the period of time where you might have thought that we wouldn't be.”