Social landlords should not abandon their solar plans because of the cut to the feed-in tariff
This may sound strange, given the turmoil we’ve seen following the government’s cut to the feed-in tariff, but I believe photovoltaics have big future. Rather than being driven by investors looking for double-digit returns and rent-a-roof sales people, PV’s future must see social landlords and contractors take strategic steps to reduce the technology’s cost, adopt new procurement models and accept longer payback times.
With more people falling into fuel poverty, social landlords’ role to provide low-cost energy to society’s most vulnerable people is one of the biggest issues the sector has to tackle and I welcome Inside Housing’s Green Light campaign, which argues for landlords to have equal access to eco-subsidies, on this.
PV is part of the fight against fuel poverty but the plan to cut FIT income has sent plans into meltdown, with landlords pulling out of deals, contactors cutting jobs and reducing installations. I’m not going to criticise the government or make a case because it’s in my interests. PV creates affordable energy; we need to think how to make PV itself affordable.
By reducing costs through economy of scale and striking innovative agreements with suppliers, such as leasing instead of buying, and accepting a lower return on investment, we can kick-start the delivery of low-cost energy on a large scale.
This is about our industry playing a long-term game. With the new 16.8p tariff for multiple installations from 1 April, we expect payback between 12 to 18 years over a 25-year lifespan. If you factor in that PV installation prices could fall 30 per cent over the next two years, which will reduce payback time, and the fact you could take some vulnerable people out of fuel poverty, that’s a compelling reason to re-adjust rather than dismiss the business model.
Chris Durkin is chief executive of Willmott Dixon Support Services