Social housing PV unviable unless FIT rates double
Incentive payments for electricity generated from solar panels need to be set at nearly double the proposed rate for installations to remain viable for social landlords, according to research.
Figures produced by consultancy Camco for the National Housing Federation show feed-in tariff payments would need to be set at 32.4 pence per kilowatt hour to remain attractive to the sector.
The government is currently proposing to cut FIT payments from 43.3p/kWh to 16.8p/kWh for social landlords from April, although its plans are subject to legal proceeding, with a key appeal being heard in the High Court today.
The government wants to cut FIT rates from 43.3p/kWh to 21p/kWh for all installations, with aggregated schemes – which would include those carried out by social landlords – receiving just 80 per cent of the new rate.
Camco’s research has found the 16.8p/kWh rate would be too low to make schemes viable for social landlords, mainly because they depend entirely on the FIT payment to justify investment as the energy savings that also result are passed on to tenants.
It has calculated a minimum tariff of 32.4p/kWh is needed to allow social landlords to continue to invest. A higher rate of 37p/kWh would give some headroom so schemes could be financed at 6 per cent, allowing the sector to deliver its full photovoltaic market potential. This is estimated at 30,000 homes and would result in the highest possible decrease in fuel poverty.
Camco has also found the social housing sector has not exploited the FIT payments as fully as other tenures, receiving about 10 per cent of the allocation rather than the 16 per cent it would receive if funds were distributed evenly across all housing types.
David Orr, chief executive of the National Housing Federation, said: ‘Our research spells out clearly the economic fact that without doubling the tariff they propose for social landlord schemes, it is most unlikely there is any future for solar PV in social housing.
‘The effects will be devastating for low income and vulnerable neighbourhoods as, due to the up-front costs of installation, social landlords were the only organisations likely to deliver these savings to these communities.’
Inside Housing is calling for social landlords to receive higher FIT payments through our Green Light campaign