PV & Feed in Tariff (FIT) - self fund or rent-a-roof option?

Everyone engaged in property matters will have come across the installation of photovoltaic (PV) solar panels, in order to reduce electricity consumption from the grid and to take advantage of Government’s feed- in-tariff (FiT) scheme. Social landlords and local authorities are making moves to undertake feasibilities and to commission installations. A key issue for their feasibility thinking is whether to self-fund installations or to do so via a third party, also known as the ‘rent-a-roof’ option.

How does each option work?
Self funding is on the face of it very simple, the property owner might choose to finance it with cash (savings) or a loan. Indeed with interest rates on savings and other ‘low risk’ investments so low, using spare cash to fund smaller PV installation and then collecting the FiTs that are generated from it, represent very good rates of return. However, larger installations may require the owner to borrow part of or all of the sums required to finance the installation. In such circumstances, with lending costs around 4-5%, this still represents a viable option, with typical PV installations giving returns of approximately 10% per year for 25 years - very attractive in today's market.

Rent-a-roof is a mechanism to facilitate funding of the upfront installation by a third party.  An investor will provide the funds necessary to undertake the installation; in return the investor will receive the vast majority of the FiT proceeds. This is established by the property owner granting a lease to the investor for the roof space, upon which the installation is fitted. The investors will typically be looking for returns in excess of other relatively low risk investments.

Assessing Feasibility
The starting point for any property owner thinking of installing PV panels through the rent-a-roof scheme is to contact the third party who will establish which properties are suitable, what the expected capital costs are and what revenue may be generated. The usual starting point is to undertake a desktop study where each property is assessed, via web-based imagery, such as Google Earth, to determine the suitability of the property for a PV installation. If the third party deems that they can make a good return on their investment they will send a sales team to validate the Google Earth survey by on-site surveys. The financial feasibility of any particular installation is a reflection of the electricity that it will generate.

This can be calculated for each property, by reference to:

- The size of the proposed installation
- The efficiency of the panels to be installed
- The expected amount of daylight hours that a property should be exposed to over the course of a year
- The orientation of the property, relative to South.

An algorithm will then calculate the amount of electricity that the installation should produce and hence the overall ‘income’ that is derived, made up of three things:

1) The tariff paid for the generation of the electricity
2) The tariff paid for selling surplus electricity back to the grid
3) The saving that the property occupier makes on using the generated electricity.

It would be usual to produce a cash-flow forecast, which would include the initial cost of installation and the forecasted ‘income’ over 25 years.

The forecast allows the property owner to:
- Assess in cash terms the revenue that would be generated.
- Assess the ‘attractiveness’ of the return, relative to other options.
- Determine if self funding or rent-a-roof might be the best option.
- The potential impact on the value of the property.
- The impact on others with an interest in the property.

The practical consequences of giving a long-term lease interest over the roof of the property, in the rent-a-roof option, must be carefully considered. While the lease will identify who has what rights and responsibilities, the involvement of a third party in the property will be an added complication, for example where maintenance has to be done to the roof, for home insurance quotes or potentially when the property is to be rented out or sold on.

- Where the property is tenanted, the lease or tenancy agreement may need changing to facilitate granting a lease under the rent-a-roof option.

Urban Energy

Urban Energy has earned a reputation as the south’s leading renewable energy specialist. This has been achieved by ensuring that from the initial point of client contact we offer 1st class customer service and care.

We only install products that lead the way within the renewable energy industry and that are renowned for their high quality and ecologically sound production. This reflects our own high standards and quality assurance.

We understand that introducing a renewable energy system to either your home or business is an investment that lasts for many years. With our in-house electrical and plumbing division it is our promise to you the customer that your satisfaction and peace of mind throughout this period is our number one priority.

For further information about Urban Energy products and services:

Call: 0800 232 1624

Email: info@urbanenergy.org.uk

Website: http://www.urbanenergy.org.uk/

Funding in England - Funding for Energy Efficiency Measures in Private and Social Housing

Carbon Emissions Reduction Target (CERT)

CERT is statutory obligation on the six largest energy suppliers to deliver energy efficiency improvements in housing. Funding is available for various measures including insulation, heating upgrades and renewables. Funding under CERT will be available until December 2012.

Community Energy Saving Programme CESP

Is a new £350 million programme that will target households in designated areas of deprivation across Great Britain. CESP will promote a whole-house approach to energy efficiency and will be funded by the energy suppliers and generators.

Eaga Partnership Charitable Trust

The aim of this fund is the relief of fuel poverty and the promotion of energy efficiency. Priority will be given to projects which focus on fuel poverty and health, hard to heat homes and rural fuel poverty. Applications are based on merit and there is no minimum or maximum limit to the grant.

Regional Growth Fund

The Regional Growth Fund aims to promote long term growth and employment in the private sector across England. It is open to private-public partnerships and private bodies. It is administered by the Department for Business, Innovation and Skills and is open for first round applications from now until the 21st of January 2011.

European Regional Development Fund

Available through Regional Development Agencies this funding is aimed at innovation and knowledge transfer, enterprise, sustainable development and building sustainable communities. In England 3.2bn Euros has been allocated for the period 2007-13. 

              

Landlords Energy Saving Allowance

The Landlords Energy Saving Allowance (LESA) is a deduction for income tax purposes when energy efficiency investments are made to properties. It is open to all landlords who pay income tax and who let residential property. Tax relief is for a maximum of £1,500 per property and landlords can claim the allowance when completing their tax return.

Funding for Social Housing

Regional Housing Boards and Single Regional Housing Pot

For 2008-2011 the Department of Communities and Local government (CLG) has allocated £10.4 billion for regional housing capital programmes covering new social housing and improvements to the existing housing stock. We recommend that you contact the Housing Secretariat at your Regional Assembly to discuss any potential funding sources for your area.

Funding for Renewable Energy

Feed -in -Tariffs

Individuals, local authorities, community groups and other organisations who install low carbon electricity generating technologies up to 5MW will be eligible to receive Feed-in-Tariffs. The introduction of Feed-in-Tariffs aims to incentivise the installation of small scale, low carbon electricity generating technologies. Each installation will qualify for a payment for each kW they produce and a further payment for each kW exported to the grid.

Funding for Community Projects

Community Sustainable Energy Programme

Available to not-for-profit community based organisations in England. Funding is available for the installation of energy efficiency measures and microgeneration technologies as well as feasibility studies. Not available to local authorities or housing associations, but good to be aware of.

Big Lottery Fund

Grants are available to organisations in the public and private sectors. This funding supports a range of measures and proposals are welcomed. Big lottery fund offers a large number of programmes - a search function on their website can help to identify the most relevant funding.

Funding for Local Authority own estate and other initiatives 

Salix Finance

Salix is an independent company funded by the Carbon Trust to work with the public sector to reduce carbon emissions by investing in energy efficiency measures. Salix provides both grant funding and expertise. A range of measures are eligible for funding and Salix typically provides grants of £250,000 and up to £500,000.

Regional Improvement and Efficiency Partnerships (RIEP's)

A share of a three-year funding package of £185 million from Communities and Local Government is available from the nine RIEPs which were created in April 2008. Depending on your RIEPs priorities funding is potentially available for projects relating to climate change.

Primary Care Trust

Health authorities are sometimes willing to invest in energy efficiency measures in the homes of the fuel poor. It is often more cost effective for health authorities to invest in reducing ill health rather than to spend money on treating the health problems.

Urban Energy

Urban Energy has earned a reputation as the south’s leading renewable energy specialist. This has been achieved by ensuring that from the initial point of client contact we offer 1st class customer service and care.

We only install products that lead the way within the renewable energy industry and that are renowned for their high quality and ecologically sound production. This reflects our own high standards and quality assurance.

We understand that introducing a renewable energy system to either your home or business is an investment that lasts for many years. With our in-house electrical and plumbing division it is our promise to you the customer that your satisfaction and peace of mind throughout this period is our number one priority.

For further information about Urban Energy products and services:

Call: 0800 232 1624

Email: info@urbanenergy.org.uk

Website: http://www.urbanenergy.org.uk/

Renewable Heat Incentive - Local Authority Funding

Details of the new Renewable Heat Incentive Scheme have been published.

The incentive, which is the first of its kind in the world, will encourage the installation of renewable heat equipment such as solar thermal technologies, biomass boilers and heat pumps. It will be funded from general Government funding, not through the previously proposed RHI levy.

Phase 1

From July 2011, the Renewable Heat Incentive (RHI) tariffs for non-domestic installations in the industrial, business and public sector were introduced. There will also be support of around £15 million for households through the RHI Premium Payment from July 2011. In return for the payments, participants will have to provide feedback on how the equipment performs in practice.

Phase 2

From October 2012, RHI tariffs for domestic properties will become available at the same time as the introduction of the Green Deal. Anyone in receipt of Renewable Heat Premium Payments will be eligible for the RHI, as will anybody who has installed an eligible technology since 15 July 2009.

The RHI Premium Payment

Up to 25,000 installations from July will be supported by a 'RHI Premium Payment' to help cover the purchase price. Eligibility criteria for the payments will include:

• A fair spread of technologies across all regions of Great Britain.
• A well insulated home based on its Energy Performance Certificate.
• A focus on properties off the gas grid, where heating fuels such as heating oil are more expensive and have a higher carbon content.
• Agreement from the householder to monitor the performance of installations.

A DECC press release on 10 March 2011 indicated likely levels of support for RHI premium payments:
 

Technology	Likely level of support (per unit)
Solar thermal	£300
Air source heat pumps	£850
Biomass boilers	£950
Ground source heat pumps	£1250

Full details of the RHI Premium Payment were published in May 2011. Due to State Aid rules there may be limits to how the Premium Payment is applied to social landlords.

RHI tariffs - domestic

RHI payments will start for homes alongside the Green Deal in 2012 to allow for a more whole-house approach to heat production and energy saving. The Department for Energy and Climate Change will consult on the RHI tariffs later in the year.
Those who have taken up the RHI Premium Payment will be eligible for RHI tariffs, as will anyone else who has had eligible equipment installed since July 2009 (exceptions apply if a grant has been received which contributed to the direct costs of an installation).
In order to receive support, local authorities and housing associations will need to be the owner of the installation and retain the rights and liabilities of the equipment.

RHI tariffs - non-domestic

Biomass, ground source, water source, solar thermal and biomethane projects in the non-domestic sector that have been installed since July 2009 in Great Britain will be eligible for RHI payments from July 2011. The payments will be made quarterly over a 20 year period to the owner of the heat installation.
A non-domestic installation is a renewable heat unit in a building which is not used as a domestic premises. This includes office buildings, schools and district heating schemes (e.g. one boiler serving multiple homes).
The support that an installation receives will be fixed and adjusted annually with inflation. For more details, see the RHI tariffs for non-domestic installations.

Applying for support

Applications for support will need to be made to Ofgem once the scheme is launched and open for business.

Further information

For further information, see the Department for Energy and Climate Change website

Urban Energy

Urban Energy has earned a reputation as the south’s leading renewable energy specialist. This has been achieved by ensuring that from the initial point of client contact we offer 1st class customer service and care.

We only install products that lead the way within the renewable energy industry and that are renowned for their high quality and ecologically sound production. This reflects our own high standards and quality assurance.

We understand that introducing a renewable energy system to either your home or business is an investment that lasts for many years. With our in-house electrical and plumbing division it is our promise to you the customer that your satisfaction and peace of mind throughout this period is our number one priority.

For further information about Urban Energy products and services:

Call: 0800 232 1624

Email: info@urbanenergy.org.uk

Website: http://www.urbanenergy.org.uk/

Home Energy Use - Useful Statistics

Home Energy Use

There are many things that we can do around our homes to save energy and reduce our carbon dioxide emissions. Take a look at how much energy and carbon dioxide we could save if we all made energy saving choices.

Insulation

With around 50% of the heat lost in the average home through the walls and loft, there is a massive opportunity for us to save a huge amount of money and reduce our carbon dioxide emissions significantly:

• If everyone in the UK installed loft insulation up to 270mm thickness, the equivalent financial saving would pay the heating bills of over 950,000 families for a year.

• If everyone in the UK that could, installed cavity wall insulation, we could cut carbon dioxide emissions by a huge 7 million tonnes. That's enough carbon dioxide to fill nearly 40 million double-decker buses or fill the new Wembley stadium 900 times!

Electrical appliances

In the UK we spend a massive £2 billion a year powering washing machines, tumble dryers and dishwashers and a further £2.2 billion a year on fridges and freezers. This produces a mammoth amount of carbon dioxide but there are solutions to reducing these emissions in the shape of Energy Saving Recommended products.

• If everyone in the UK upgraded their old cold appliances to an Energy Saving Recommended product, energy wastage would be cut by over two thirds and enough carbon dioxide would be saved to fill 24 million double-decker buses. There would also be enough electricity saved to run the UK's streetlights for 6 years

Reduce carbon dioxide emissions by using Energy Saving Recommended products.

Don't leave appliances on standby

Did you know that over £900 million worth of energy is wasted by leaving appliances on standby, so do your bit and don't leave your TV or other appliances on standby, and switch off chargers at the wall if they are not being used.

Lighting

In the UK, we spend £2.4 billion lighting our homes, and with lighting accounting for 10 - 15 per cent of our electricity bills there are substantial savings to be made by using energy saving light bulbs:

• If every household installed just one energy saving light bulb, the electricity saved in a year could power the Blackpool Illuminations for nearly 900 years and there would be enough carbon dioxide saved to fill the Royal Albert Hall 1,980 times!

Save on electricity bills by using energy efficient bulbs.

Urban Energy

Urban Energy has earned a reputation as the south’s leading renewable energy specialist. This has been achieved by ensuring that from the initial point of client contact we offer 1st class customer service and care.

We only install products that lead the way within the renewable energy industry and that are renowned for their high quality and ecologically sound production. This reflects our own high standards and quality assurance.

We understand that introducing a renewable energy system to either your home or business is an investment that lasts for many years. With our in-house electrical and plumbing division it is our promise to you the customer that your satisfaction and peace of mind throughout this period is our number one priority.

For further information about Urban Energy products and services:

Call: 0800 232 1624

Email: info@urbanenergy.org.uk

Website: http://www.urbanenergy.org.uk/

Farmers to benefit from £100m fund in renewable energy

Farmers in the UK will now be able to access a new £100 million fund to support the costs of installing large-scale renewable energy systems.


Barclays, with the help of the National Farmers Union (NFU), will provide loans to fund new solar panels, wind turbines and hydro electricity on farmland.

According to figures compiled by the bank, 37 per cent of farmers plan to invest in renewable energy, many of whom will be installing renewables in the next year, with the hope to generate returns of around £25,000 a year through the feed-in tariff (FIT).

However, the move also comes at a time when the government reduces the payment level that farmers can get through FITs, so the loan could be an additional incentive and help to reach the UK's renewable energy targets.

"The opportunities for farmers to produce renewable energy thereby helping to decarbonise the economy and contribute to the UK's long-term energy security are there for all to see," commented Meurig Raymond, NFU deputy president.

"Given the significant up-front costs of renewables technologies, commercial lending is essential to unlocking these opportunities."

Reference: Energy Saving Trust

Urban Energy:

Urban Energy has earned a reputation as the south’s leading renewable energy specialist. This has been achieved by ensuring that from the initial point of client contact we offer 1st class customer service and care.

We only install products that lead the way within the renewable energy industry and that are renowned for their high quality and ecologically sound production. This reflects our own high standards and quality assurance.

We understand that introducing a renewable energy system to either your home or business is an investment that lasts for many years. With our in-house electrical and plumbing division it is our promise to you the customer that your satisfaction and peace of mind throughout this period is our number one priority.

For further information about Urban Energy products and services:

Call: 0800 232 1624

Email: info@urbanenergy.org.uk

Website: http://www.urbanenergy.org.uk/