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Low Carbon South West : Energy At Home : 27-02-2015

Solar Power: Demand and Opportunity in

Renewables and Eco-construction

The Importance of Solar Power

Why is this stuff so important?

• The sun isn’t – as far as we know – going anywhere.

• Solar PV prices have dropped hugely in a very short time, and more reductions are forecast year on

year. In 2005, I installed at Chew Magna Primary School with government grants, at a cost of £31,000

for 5kWp - £6200 per kWp. The same system now would be around £6000, or £1200 per kWp.

• Solar pricing isn’t quite following Moores law – the one which says a computing power doubles every

year for any given area, but it isn’t far behind.

• Of course, the sun doesn’t shine at night – or as much in winter - when we use most of our power, but

I will come onto that later, because that paradigm is shifting too.

• At a basic level this is really sensible, low pollution energy generation technology that we can have on

our own homes and businesses – it represents a huge step towards democratised energy


Why is this stuff so important: 2/.

• February 2015, The International Energy Agency “Solar energy will be the largest global energy

source by 2050”

• September 2014, German Thinktank, Agora Energiewende “Solar PV will provide the cheapest

electricity of any source within 10 years”

• Elon Musk, owner of Tesla Motors, Space X and founder of Paypal also owns the largest solar installer

in the USA (Solar City), and sees solar as THE future energy source above all others.

• January 2015, Financial Times “Why solar is the future”

• May 2014, The Economist “The Future of Solar is very bright indeed, is more efficient when used

locally and financial models are more innovative than ever before”


A crucial technology that has fully matured.

• Increasing deployment in UK – we are now consistently amongst the top 10 global markets for solar

0

1000

2000

3000

4000

5000

6000

2008 2009 2010 2011 2012 2013 2014

Cumulative Installed PV Capacity (MW)

Cumulative Installed PV Capacity (MW)

• As of January 2015,

5.4GW of solar is now

deployed in 646,000

installations.


A crucial technology that has fully matured: 2/.

• Despite some remaining misconception, the UK

has a good solar climate – the technology only

requires light, not necessarily direct sunlight

• There are 250,000 hectares of South facing

commercial rooftops alone in the UK, a huge

and virtually untapped resource of energy

generation, but also a great opportunity for

owners and occupiers to reduce their energy

bills.

Solar PV demand vs opportunity

The installation market.

• Growth in installers:

• Up until 2010 there were very few, probably under 30 installers across the UK – in fact we

almost universally knew each other!

• In 2010, with the introduction of the feed in tariff, this grew, peaking with 4834 installers in

October 2012.

• At this point, the domestic tariff dropped because it had been set at a very high initial rate. As a

result, lots of marginal installers either left the industry or their business models couldn’t adapt to

the new economic environment.


The installation market: 2/.

• After the “shrinkage” of installers, we have now stabilised at around 2700 nationwide, but there

remains some consolidation to be seen yet.

-

1,000

2,000

3,000

4,000

5,000

6,000

2010 2011 2012 2013 2014 2015

Inst

alle

d C

apac

ity

(MW

)

Cumulative solar photovoltaics deployment (monthly)

Other Solar

Renewables Obligationaccredited

Feed in Tariffs eligible

• There is still considerable

work going on in the sector,

but the way it is delivered

has changed - very few

installers now use their own

teams – subcontractors are

standard


The installation market: 3/.

• We, along with most other installers in the UK market, now look to have on our books a team of

properly accredited and experienced solar installation sub contractors whom we can call when the

need arises.

• These would include commercial and domestic roofing teams, electricians and also other specialist

contractors who can cope with anything from structural surveying to CAD design.

• The model of having a team of vans full of staff is not one that many companies can efficiently

maintain anymore now that margins are lean. Businesses that cannot be lean simply cannot operate,

so entering as a new installer now is not generally advised, but training to be able to offer services to

existing installers is a sensible way to gain entry to the industry.

Is solar relevant to my business?

• Domestic is still a huge market to be unlocked – there are new financial models coming on

stream the entire time, meaning that people don’t have to buy the system outright if they

don’t have the capital to spend.

• Free Solar is still operating, but its days are numbered as the tariffs reduce and investors see

better or less risky opportunities elsewhere.

• Most new finance schemes will follow one of two routes: lease purchase, whereby cheap

finance is obtained from a bank or other provider, and the cost of monthly repayments is

covered by the feed in tariff and increasingly, bill savings.

Future markets.


• Secondly, the domestic Power Purchase Agreement market is about to explode in the UK.

This is the natural successor to Free Solar.

• The home owner leases their roof to the system owner

• The home owner gets discounted electricity from the array for 20 years, making a

saving of 15% per year or over on their bills.

• No capital outlay. No risk. No complicated free solar sales clauses or mortgage issues.

Future markets: 2/.


• The UK large ground mounted array market is booming but the UK Government is putting

huge emphasis on the rooftop commercial market.

• The large scale commercial rooftop market is already starting to get busy and looks forecast

to continue through to 2020 and beyond.

• There is a growing number of financial models here too.

• The community energy sector - community ownership of local energy generation – has also

seen rapid growth and we expect this to increase in the coming months and years, with

ground-mounts, commercial rooftops and aggregated domestic roofs involved.

Future markets: 3/.

What is driving the market?

Standard ROI Breakdown

Feed in Tariff

Export

Energy Savings

Feed in Tariff – paying you for every unit of

electricity that you produce, whether you use

it or not. Index linked to RPI

Export – paying you for every unit of

electricity you export to the grid.

Energy Savings – your savings from not

buying electricity via the national grid. This

increases year on year as your unit price goes

up.


From eco-bling to a proven demand reduction tool

• That model is changing gradually, with energy savings becoming an ever more important and

greater part of the investment case.

• Even though we are seeing short-term reductions in fossil fuel pricing, this is not affecting the

retail electricity price, which remains forecast to rise by at least 5% per annum over the next

5 years, against an average 9% per annum rise for the last 5 years.

• Energy savings become ever more important in all sectors – I’ll come to this in a moment


From eco-bling to a proven demand reduction tool : 2/.

• In commercial and industrial settings, solar is becoming really well accepted as an easy way

to drive down energy costs without necessarily needing to spend anything upfront – again,

lots of innovation is happening in the financing of solar PV

• For those who do want, or have the capital to invest, the returns are more compelling than

ever before – 15-20% [and more] per annum, index linked to RPI for 20 years. Point us to a

bank that can offer close to that?

• But these are the carrots – there are also some sticks:


From eco-bling to a proven demand reduction tool : 3/.

• Energy Performance in Buildings Directive, means all rental buildings (commercial first, then

domestic) that are leased will need to reach an energy performance of E or above by end

2018, or they cannot be let. Solar PV generally boosts the building energy grade by one

rating, so this can be a free way for a landlord to increase building efficiency.

• Energy Savings Opportunity Scheme (ESOS) – places a legal requirement on large (non-

SME) companies to audit their energy use each year, and PV can offset the cost of these

audits. – again, with no necessary upfront capital cost

Future Trends

What are the future drivers?

1. Storage.

Without a doubt, the single largest future driver of PV uptake is the introduction of storage

that allows daytime generation to be used at night.

Future Trends

What are the future drivers : 2/.

2. BIPV and others

Building – and infrastructure – integrated solar is also a growth market.

We have some indication that there will be a “window” on Feed in Tariff reductions for

building-integrated solar, to allow the market a break to mature and become more cost-

competitive with bolt-on solar. This is good, because BIPV tends to ensure that more money

is retained in the local economy that standard bolt-on PV.

3. There are other drivers coming that include cheaper technology per wp installed, but the

main driver in the UK market in the next 24 months will be increasing energy self-use via

storage technologies, and the UK Government is now backing these with funding.

Projects

Some of our own recent solar installations

ACE , Bristol College

System Size – 60kW Annual Output – 54,000 kWhrs/yrAnnual CO2 Savings – 30,618 kg

Southmead Hospital


Poultry Farm, Somerset


Cardiff Galvanisers


Nisbets, Avonmouth

System Size – 10.5kW Annual Output – 4,800 kWhrs/yrAnnual CO2 Savings – 2,500 kg

Dekomte Ltd


Projects

Some other recent solar installations and products

Toyota Motors


Blackfriars Bridge

System Size – 1.1MWpAnnual Output – 935,000 kWhrs/yrAnnual CO2 Savings – 455,000 kg

Bentley Motors

System Size – 5.1MWP Annual Output – 4,300,000 kWhrs/yrAnnual CO2 Savings – 2,111 Tonnes

Printed Solar Glass Solar TilesMotorway Solar

100%

Solar PV. Nothing else.

10 year

Standard guarantee

0%

Hard Sell

Professional, competitive and reliable PV

installations: it’s all we do

THANK YOU for your time

your power, solar power: demand and opportunity, energy at home, the pelican, chew magna, 27 feb...

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