A growing opportunity for businesses
The move to renewable energy is an irreversible journey; not only are fossil fuels a finite resource but the lobby for clean fuel is only going to get increasingly intense.
Whilst it has moved on in the last few years, the government indicated in its 2014 Solar Strategy that there are 250,000 hectares of south-facing commercial roof space in the UK. Projections by KPMG suggested that the UK was on track to achieve 4-5% of its energy consumption from solar PV by 2020 with a minimum of 15GWp of capacity. Based on the above assumptions alone we should be significantly exceeding this capacity.
Harvesting this potential requires both forward-looking owners of commercial property and a responsible solar industry.
Sound economic sense
Installing solar PV on commercial roofs can make sound economic sense; it reduces carbon emissions, offsets the need to purchase peak time electricity from the grid, puts unused rooftop space to good use and helps to insulate companies from future electricity price fluctuations.
Challenges the industry faces
Many will see the solar industry as reasonably mature but in truth, it is still relatively new and with significant changes occurring over the last few years with the Feed-in Tariff (FiT) subsidy, along with the changes in business rates, Clients need clarity from their partners.
In many quarters there is still a level of mistrust in an industry that has, it could be argued, not universally applied the right level of rigour to its sales, installation and after-care approaches. There are of course as with most industries, a majority of highly reliable, trustworthy and reputable businesses but it is incumbent on all to ensure this develops.
Looking after Clients is paramount to ensuring that they fully understand the implications and performance they should expect from their solar PV system; it is, after all, a long-term investment.
What considerations are important to consider
At Zestec, we develop, acquire and manage renewable energy assets for investors and apply a high level of rigour to our process, to ensure that client and investor expectations are met.
Most commercial property owners that install solar PV are not even aware they are acquiring a tradeable asset; i.e. it is something that they can potentially sell in the future should they require a capital injection. Additionally, they are unlikely to be buying many solar PV systems, so knowledge, transparency and knowing the right questions to ask are critical.
We not only fund the development of new build solar PV systems under a Power Purchase Agreement (PPA) but also Buy-Back systems on behalf of our investors. It is often during our due diligence of existing systems where we identify some of the pitfalls that clients should have been made aware of, which unnecessarily adversely affect their investment.
- Ensure that the specified system size is appropriate and based on accurate on-site electricity consumption; we have unfortunately seen too many systems that are over-specified for the requirements of the business.
- Check the provenance and brand of the equipment to be installed, along with product warranties; these will affect performance (and price).
- Get clarity on the expected performance of the system and under what conditions and criteria this has been assumed.
- Check what performance guarantees are given and for how long by your installer.
- Make sure that you get a copy of the system design and agree exactly how this will be mounted on your roof. Any variation from this can affect performance.
- Be careful to price in the O&M (operating and maintenance costs of the system) over its lifetime and decide who you will contract with.
- Ensure you have the necessary permissions, for example, from banks, local authorities or other stakeholders that may have an interest in your property.
- During the design phase, consider the future potential for the asset in terms of potential for battery storage and electric vehicle (EV) charging.
- If you are considering a capital purchase of the system, check this against a fully funded PPA alternative to see what capital you may be able to retain and deploy elsewhere in the business. You will still benefit from significantly cheaper electricity and avoid some of the challenges above.
- If you’re considering a funded PPA solution, ensure that you are comparing submissions that all include the total costs, otherwise you may end up with a surprise when selecting what, on face value, may look the cheapest.
Protecting your investment
Keep in mind that on any capital purchase, if for any reason your installation is not implemented correctly, or you do not keep up a good O&M programme, you are risking both ongoing performance and the potential future cash-value of this asset.
If you are considering the installation of a commercial solar PV system, we are always happy to discuss options. Please contact us at zestecgroup.co.uk or call 01202 862760.