Interesting Times in the Solar PV Sector

Anyone with a professional or end-user interest in solar photovoltaic power production and who is also familiar with the apocryphal Chinese curse, May you live in interesting times, could be excused for spotting a connection. There is no doubt that the UK’s installers of solar PV systems have had a particularly difficult time in recent years, whatever part of the market they serve - or in some cases, served until events overtook them. However it would seem likely, and only hindsight will confirm, that the corner has actually been turned and the industry can look forward to better, if still challenging times ahead. For customers, the challenges relate to funding and specifications and understanding the wide range of offers that are currently available.

With the government encouraging a change in emphasis from the installation of solar PV in large ground based solar farms to commercial rooftops there are a confusing number of funding offers and technology options available.

According to Jonathan Bates, director and general manager of Photon Energy, a leading independent solar PV design and installation company focused on commercial, public sector and agricultural applications the situation has improved and the market is again growing steadily despite the fact that winning contracts remains highly competitive. “It would be good to see wider margins, but we are very busy tendering and business is definitely better now there is more work around.

“However, funding remains a challenge for many customers, and is it important that they understand the proposals they receive from a technical point of view.  It is still the case that many consultants do not understand the technology and are not offering sensible advice.  There is a tremendous  variation in the quality of solar modules across the marketplace – a product being certified under the Micro-generation Certification Scheme does not mean it is necessarily good quality; the MCS is more a mark of minimum acceptable quality.  There are some top quality premium brands such as Sunpower and Panasonic offering very high efficiency panels but at a premium price and there perhaps half a dozen good quality Chinese brands such as Trina, YingLi and JA Solar to name some.  It is also true that there are a lot of poor quality modules from smaller Chinese manufacturers that are MCS Certified.   It is the same with inverters, and crucially these are not even covered by the MCS; there are high quality Chinese products available and there have been recent casualties amongst European manufacturers.”

The long term outlook for solar is very good – it is doubtful that much can change that, although the politicians could make things very uncomfortable in the short term by creating uncertainty in the market.  As David Cameron recently acknowledged in a speech before Christmas: “Solar has been a huge success story … is rightly popular … and … likely to become the first renewable to be genuinely cost competitive with gas”.  

For that outlook to materialise into a substantial volume of installations with the attendant environmental and cost benefits, building owners and those responsible for mechanical and electrical services in them will need to engage an interesting blend of wisdom and imagination, he advises. “The wisdom applies when it comes to specification. The imagination is about making far more use of commercial rooftops than we’ve done so far in the UK; Europe is well ahead of us on that one.”

Specification of solar modules, inverters (that connect them to the building’s distribution system) and roof fixing systems is generally down to the installer; the building owner is rarely involved. In a market that is as price driven as solar PV currently is, some installers will inevitably pick the cheapest and lowest quality products, claim they are certified under the “government backed” MCS having little regard for the longevity of the system.    “Going forwards, building owners and specifiers should consider requiring installers to provide performance warrantees or source O&M contractors to ensure systems are well maintained.  It is surprising how few of these are asked for” he says.

Interestingly, Photon Energy is one of only five companies in the UK to have a framework agreement with Macquarie Lending to help owners of large roofs install solar PV systems while avoiding capital expenditure of their own. Macquarie Lending finances the full capital cost of the solar PV installation and then sells the electricity generated to the building owner at a reduced rate – typically between 5p/kWh and 7p/kWh depending on the building location and its orientation.  In return Macquarie Lending receives the feed-in-tariff and any export tariff for the 20 year duration of the feed-in tariff scheme.

Owners of buildings benefit from the certainty of linking their electricity price to RPI for 20 years, and a smaller carbon footprint due to their use of solar power. At the end of the 20 year contract period they take on ownership of the solar PV installation and continue to benefit from the power generated for the remainder of the working life of the solar PV modules.

Photon Energy started its first project under the agreement in October 2014 and completed it at the end of January 2015. It comprises a 1MW solar PV system for Hitachi Rail Europes first manufacturing facility in Europe with 3,800 high efficiency 265W mono-crystalline solar modules from Trina Solars and 28 PowerOne Trio27 inverters. The £82 million, 44,000 m2, state of the art complex is currently being built by Merchant Place Developments, Shepherd Construction and Network Rail at Newton Aycliffe, County Durham, and is where the new Intercity Express trains for the Great Western Main Line and East Coast Main Line will be produced.

It is understood that Macquarie has an initial tranche of £50m to be spent on this model and if it proves successful the fund is likely to be increased. The arrangement lends itself to such applications as data centres, distribution hubs, manufacturing facilities and airports, interested in a financed PV system and low-cost solar electricity, in fact for anyone with a big roof, high demand for electricity and no desire to part with the capital,” Jonathan Bates continued.

Medium and large scale solar PV installations are all individual. Technically and financially getting things right comes down to having a clear vision of what you want and team work involving the building owner, the funder and the system designer and installer. Jonathan Bates concludes.