Tangible tariffs

Back in April 2010 a small revolution began. For the first time in the UK, individuals, companies and organisations could install technology to harvest renewable energy and sell any excess they generated back to their mains electricity provider. The Feed-in Tariff (FiT) offered end users the chance to reduce their energy bills, reliance on the National Grid and establish a new revenue stream – a stream that will last 25 years.

In the first two months, more than £180,000 was paid out to those who had taken advantage, claimed Ofgem, the UK’s energy regulator. Impressive stuff. 15.2MW was generated and the majority came from domestic installations. But only just – the commercial sector contributed about 40 per cent of the total from micro-renewables, mainly from solar panels, but wind and hydro-power supplemented to that figure too. 

At the time of writing, no figures were available to assess what impact the Comprehensive Spending Review (CSR) had on the take-up of renewables. Hopefully not much, and certainly our own experience since the CSR have not shown a drop off in demand. For all the cuts announced in October 2010, the coalition Government did commit itself to honouring the current level of payment for energy until the first review in 2013. That means organisations; businesses and private homeowners will continue to be able to claim 42p for every kilowatt hour they feed into the grid for at least another two years.

The Government also confirmed its commitment to the Renewable Heat Incentive (RHI) scheme, to be introduced in June 2011 – a piece of legislation similar to the FiTs, but focussed on incentivising the uptake of technology that replaces the traditional fossil fuel based heating systems: ground and air source heat pumps and solar thermal technology in particular. 

All this means that businesses and homeowners who are considering installing micro-generating capacity should be minded to press ahead with their plans. The current conditions for incentivising uptake are probably at their most favourable levels, and installing the technology now will help to deliver the greatest return on the investment.

Choosing the right technology
Another statistic to emerge since that FiTs launched is that solar photovoltaics – panels that use light to generate electricity – have been the most popular renewable technology. The reason why is straightforward. Most installations have been by private homeowners and PV technology is the least visually intrusive, easiest to install and requires minimal maintenance.  But PV should not be seen as the default technology. It is important that all prospects are explored before settling on a final decision. Wind, hydropower, combined heat and power units, biomass and anaerobic digestion are all eligible FiT systems – as long as they are under a generating threshold of five megawatts.  

In fact solar PV’s dominance of the market will probably diminish as commercial organisations and public sector bodies investigate their renewable energy potential. Organisations tend to have many other considerations which they need to factor into the decision-making process.  

A straightforward example: a food manufacturing company might be able to make a virtue of its waste products by installing an anaerobic digestion facility. Such a development could have happy side effects too – a reduction in costs associated with waste disposal and a cleaner, greener reputation could give the company a competitive edge over rivals. Landowners might have a watercourse ideally suited to hydropower, or sawmills might be able to fire their waste products in a biomass unit – there are numerous opportunities on offer.

Besides choosing the best renewable source, baseline energy requirements, available investment, the return on investment period, maintenance requirements and local-planning rules all need to be established.  

Investing in renewable technology, although cost-effective in the long run, does require upfront investment and it is crucial that every factor that affects the performance of the system is carefully weighed up. Taking a technology neutral approach at the outset will optimise the return on an investment.

Back to basics
Given the focus the FiTs’ have brought to microgeneration, it is understandable that the technology and revenue-generating potential have monopolised the limelight in the previous 12 months or so. For many companies however, it is well worth taking a step back and really getting to grips with their energy consumption patterns and where efficiencies can be made; after all, reducing total energy requirements not only makes sound business sense, it has a positive environmental impact and means future revenue from renewables is maximised.

At SOL2O it has been a principle to assess energy saving advice alongside installation capability. After all, many energy saving measures carry little or no extra capital cost, but can have a significant impact on the overall performance of any renewable energy system.

Looking forward
What is not in doubt is that demand for micro-renewables will continue to gather momentum. Government backing is assured; the country has legally binding targets to increase energy generated from renewables to 15 percent by 2020; global environmental imperatives and volatile energy costs all contribute an impetus to green energy generation where it is needed.

Despite market potential driving technology development, it will still be the early adopters who will reap the greatest returns on their investment. More efficient technology combined with a growing levels of adoption will mean the cash paid out to micro-generators under the Feed-in Tariff will likely be curbed – probably incrementally after the next review in 2013. It means companies that are seriously considering opting for renewables should push on with any plans now;  for the sun won’t shine much brighter.