Innovation on Social Housing PV in the Public Sector
In a recent blog for Clean Energy News, Stephen Cirell considers the radical move by North Ayrshire Council in Scotland to ask Council tenants for a contribution towards a solar PV system for their roofs.
I read with interest in Solar Power Portal the piece ‘Over 1000 homes to be offered solar by North Ayrshire Council.’ This demonstrates that local authorities remain innovative in their quest to make renewable energy projects financially feasible in a difficult economy.
Many authorities are analysing their options to solar PV projects. Generally, they divide into land based facilities (solar farms) or buildings based. The latter can be subdivided into civic buildings (town halls, offices and leisure centres) and social housing. Housing is differentiated due to the fact that tenants make the project require a different approach.
Currently, there is still a feed in tariff for domestic housing, although it is radically lower than it was. The problem with housing schemes is that all the early social housing schemes gave the tenants all of the electricity free, on the basis that the local authority would keep the FIT payments. Back when these were north of 20 pence per kWh, this meant the projects could be funded without the need to acquire payment in respect of the electricity itself.
However, those days have gone. Without a higher FIT, there would be insufficient funds to amortise the costs of the installation without taking into account the export payments or sale of the power itself under some form of PPA. This leaves local authorities wanting to go down this route with a dilemma.
The first issue is how to sell the deal to tenants. If they expected fee electricity and it is not forthcoming, they will be less than enthusiastic. The second issue is how to stack up the finances.
On that second issue, there are various options that we are considering for local authorities around the country. The first is to establish an ESCO (reference ESCO pieces), whereupon the Council can then sell the power to the tenants. Whilst this is obviously not giving it away, if the price is a substantial discount on average prices, this may still be attractive. If a full blown ESCO is not possible, then a white label deal might have the same effect.
Another alternative is to fit battery storage with the solar PV and commission a management system to aggregate all of the power from the batteries on a single screen, so that this can then be traded on the market, either via the Capacity Market or National Grid contracts. Whilst the tenant does not benefit from this, the profits of such a venture should be sufficient for some other benefit to be provided for them, whether linked to rents or the accommodation that they occupy.
However, North Ayrshire has taken a different route. It has determined that the way forwards is to ask tenants for a contribution towards the systems being fitted. Accordingly, it will now enter into a consultation to gauge potential take up under the scheme, before a procurement exercise to appoint a contractor to undertake the work.
This is a radical step. To my knowledge, this has not been tried before and the authority is to be applauded for identifying and trying out a completely new approach.
Sadly, it is unlikely to work. Council tenants are not usually in a financial position to be able to afford investments of this kind. Much of our work recently has focussed on fuel poverty and a good number of those in that category are in social housing. Even where there is an ability to pay, there are complications with the tenancy and how long the tenant may occupy the property. Finally, there is the simple issue of whether they will prioritise this as an urgent need.
The last point is possibly the hardest. Getting ordinary people to accept the need for action is very difficult and many home owners were not sufficiently persuaded to make such an investment, even though it would enhance the asset that they own. It would be remarkable if Council tenants led the way on this approach.
But we will never know without someone trying it and so this development is to be warmly welcomed. I am sure that many authorities around the country will be looking very closely at the results.
Stephen Cirell is an independent consultant on the green agenda specialising in local government and the public sector. He is author of books on both solar PV and biomass.