Lark Energy well prepared for post-ROC era diversification, says MD

It’s been a busy year for Lark Energy, development managing director Jo Wall says, but there is a looming insecurity about what the future might hold.

ROC subsidies are disappearing, all but grinding the UK’s ground-mount market to a premature halt, and the “cutthroat” pricing that has become the norm in the commercial rooftop sector Wall says is driving people out of business.

Speaking to Solar Power Portal after Lark Energy was named inside the Top 10 of this week’s EPC rankings, Wall reveals that the company is now kicking into action a diversification strategy two years in the making.

What would you say have been the main obstacles to deploying solar?

I think probably the biggest challenge for us has been around actual panel supply. I do think some of the panels have been in relatively short supply, particularly in the first quarter of this year where in previous years it's been a bit more manageable. This year it's started a bit earlier, and I think one or two of the panel manufacturers are starting to move their focus out of Europe as a consequence of what's been happening.

Did that change your relationship with those manufacturers or suppliers?

We probably used a wider variety of panels than we have done in the past.

With many installers feeling buoyant about its prospects at the moment, what is Lark's take on the rooftop market?

I think the market's fairly congested with a lot of people trying to do a lot, but the reality is the pricing is absolutely cutthroat and, I personally think, unsustainable. I think we're already starting to see that there's a number of bigger players in the UK industry that have gone out of business because they just can't sustain any viable business model on the margins they make on rooftop on its own with the increasingly aggressive cuts to the feed-in tariff, which really don't help because we still have MIP in place. 

Do you feel the current government need to be a bit more vocal or supportive on the issue of the MIP?

I think they've been reasonably vocal on the issue actually. I think where they perhaps haven't done as much is the lobbying some of the European member states who might be a bit more sympathetic.

From a Lark perspective, how is the company set up for the year ahead? Is it persevering with projects under 1.2 ROCs or switching its focus to rooftops?

We've been planning for the changes to the ROC tariff for nearly two years now, and as a consequence we've been diversifying our whole business cluster. We are continuing to do some 1.2 ROC projects, we will also be delivering a £9 million energy from waste plant in Scotland within the next six months and we're doing quite a lot of gas generation projects because that's seemingly where government policy is. We've also established solar PV development businesses in America and Ireland.

Has it then been a case of having to recruit for those projects, or train up existing staff for that diversification?

We have always had a reasonable amount of engineering capacity and we've boosted that with some mechanical engineers. We've had within our business the skills to deliver other technologies for a while, and in fact Lark Energy was originally established to deliver site-wide solutions for housing and solar wasn't necessarily the only technology. For us it's something that we've always intended to do, it's just we've been quite busy with solar so we haven't done too much until now. Now it's very much a question of diversifying and also moving into some unsubsidised areas of business as well. The other thing we've done within the last six months is establish our own ICP business. We're starting to move into much more mainstream commercial areas as well as subsidised renewables. 

We will continue to look at solar opportunities, but they'll be amongst a selection of other things we're looking at and we'll work out whether or not they're the best thing to be focusing our resources on over the next couple of years. 

So is Lark taking on projects on a case-by-case basis now, rather than working on big development pipelines like the ROC periods have created I guess?

I think there's an element of that, and I also think working in new territories gives us the opportunity to keep our engineering capacity in tact, which we feel supports our O&M business in the UK and it does mean we will continue where we have project rights in the UK to deliver those.