United Kingdom : UK PV Market in Transition [TendersInfo (India)]

Government backed Feed in Tariffs (FITs) that incentivise renewable electricity generation are due to be trimmed after the 31st July in response to the rapid uptake of solar PV projects. Reductions in PV FIT rates (approx 10%) together with a decrease in the period of support from 25 to 20 years after July 2012 have led to a race to the finish line.

Chris Jones of Savills Agribusiness team comments Despite the pending cut in FIT rates, installation costs are also set to reduce by approximately 10%, whilst the export tariff is also rising to 4.5 p/kwh, so the opportunities are still very much alive . Well established links with solar installers has allowed Savills to successfully oversee the retro fitting of existing agricultural buildings with PV panels, making use of a farm s existing assets. A buyer s group approach has enabled clients to benefit from discounted installation costs and attractive returns on capital. Many of the schemes have been installed on buildings with high electricity demand, such as dairy buildings and grain stores; boosting the returns by 5 10%.

Inevitably degression of the FIT scheme has stimulated the industry to move away from smaller scale systems and towards much larger field scale and very large roof schemes under the Renewable Obligation Certification (ROC) scheme, where ethical power investors and pension funds in particular are showing more interest in the market. Any PV sites capable of an approximately 1Mw scheme (c.5 acres) and upwards will be very carefully considered by an investor, with good ground and roof rents being paid. PV offers a complete package technology; it has no moving parts, uses no fuel and requires very little maintenance, making it an ideal investment.

Investors and landlords work together in a number of ways but these essentially these boil down to paying a ground or roof rent for installing equipment. These rents will either be paid as a capital sum, a proportion of the FIT, cheap or free electricity sold to the landlord obviously these depend on scheme sizes. Funders are also considering joint ventures with landlords.

Chris adds: Most importantly Savills are obtaining ground rents which can easily surpass what a farmer can achieve out of conventionally farming an acre of land, particularly marginal agricultural land; it is essentially a beneficial diversification option for marginal land or unutilised roof space.

Many of the large schemes (+ 25 acres) which were previously considered under the original FIT scheme, prior to the announcement of the Fast Track review in August 2011, will, once again be of interest to several investors under the ROC scheme . Chris urges farmers in this situation to get in touch whilst the current window is open to assess sites and take them forward.