The newly-elected Conservative government has made it clear that it wants more solar to be installed across the UK’s mostly untapped commercial roofspace. Solar Power Portal spoke to Alex Cooke, general counsel at Kinspan Energy about the state of the UK’s commercial rooftop market and what can be done to unlock the 250,000-hectares of currently unused commercial roofspace.
How are Kingspan Energy finding the UK commercial rooftop sector?
Buoyant and optimistic. I think as a business we’ve been waiting for our time. In the sense that, because of our roof manufacturing heritage we’ve remained quite purist, we’ve strategically taken the decision to stick to what we know best and focus on the commercial rooftop market.
The ground-mount boom came and was wonderful for the industry in terms of setting precedent and market positions, and generating funds – both VCT and EIS money in the early days – which was then superseded by more institutional money, we’ve seen a big increase in public listings and investors. Bluefield, Foresight and Lightsource have all done good things for the market in the sense of raising capital for investment in solar PV but a lot of that until relatively recently was invested in ground-mount.
Commercial rooftop has been somewhat in the background, in the shadow of ground-mount and residential. We feel that it’s commercial/industrial’s time to shine and that’s what we are working towards.
Government policy is now aligned, and it’s great to see the genuine realisation that we have all of this unused commercial and industrial space that is redundant at present. It could be put to fantastic use by giving customers a great place to invest their capital – which is first and foremost. The driver in all of this is still unfortunately pound notes. The environmental aspect does come into it, but our biggest clients that have invested in large rooftop portfolios have done so because of financial returns, not because of CSR.
What has changed to make it commercial rooftop’s ‘time to shine’?
Government policy: the splitting of the ROC band to give more favourable support to roof-mounted projects. The splitting of the degression rates for the feed-in tariffs (standalone vs. roof) helps. I think generally political attitude and the position of DECC has really made the industry sit up and realise that this is the direction of travel. In one sense that’s great because that makes a noise in the market and many more customers are now thinking that solar is an option to them. But that brings with it increased competition and challengers into the market for ourselves as one of the first movers in the space initially.
The extension of the permitted development has made things easier, but typically planning isn’t problematic to obtain. It’s not like ground-mount or onshore wind where there’s a large amount of commercial risk attributed to the success or failure of planning. We perceive it more as a given if we have to go in for it. The problem it creates for a business is the fact that you are on a 13-week decision period that has a soft cost attached to that which is significant.
Increasing permitted development to 1MW was helpful but my gripe with it is that I still can’t imagine a scenario where a building that is capable of accepting a 5MW rooftop system would be more sensitive from a planning perspective than one which can host 50kW.
When I’ve had discussions with people in the government, no one has been able to successfully explain why the marker was put down at 1MW.
Has Kingspan noticed an increase in appetite in the market for commercial rooftop?
Yes we have and we’re seeing different types of customers becoming more active in the market. The owner/operator/occupier market has always been interested in this space and are the easiest to get at customer because everything aligns – they are picking up the bill, and have control of the property asset.
What’s taken more time to come through to the market is the landlord/tenant relationships. I once described it as ‘if owner/occupiers are the low-hanging fruit then landlord/tenants are the fruit at the top of the tree that is tastier if you can reach it’. The big entities out there, the big retailers, the big property investors, own huge volumes of floorspace. The nature of solar is that it is quite a complex sell which represents quite a journey for a customer. If you can do that with a customer which has 10 million square feet of retail space that’s great for getting scale of market and scale of business.
One of the constant gripes that we hear from the industry is the length of the decision-making process of commercial rooftop. Is that something that Kingspan has overcome as one of the early market entrants?
I don’t think by any stretch that we’ve been wonderfully successful where others haven’t. The reality of industrial/commercial is that you’re talking to business where this isn’t a key focus. You’re talking to businesses where this is very much a sideshow. There’ll be an energy manager, or facility manager, or property manager within that business that is the champion. The relationships that work the best is when you have somebody on the customer side that is prepared to push solar.
You do need that internal champion, if you have people that are indifferent about it then in those circumstances is seldom runs up the agenda and to-do list quickly.
The reality is that there are just different stakeholders with each customer that need to be brought along on the journey. Good press, better understanding, increased knowledge, better understanding of technology, confidence in the technology – all of these things will help speed it up but fundamentally you need customers to have an internal champion in order to bring the stakeholders along.
