Lease model could save landlord schemes threatened by low FIT rate
Solar firm makes PV viable despite FIT cut
A solar firm has worked with lenders, accountants, lawyers and a housing association to develop a lease model to work with the new, low-rate feed-in tariff.
Social landlords have seen their solar plans largely stopped dead by an earlier than expected cut to the FIT, under which government payments to producers of renewable electricity will be slashed from 43.3p per kilowatt hour to 16.8p/kWh in April.
The cut for social landlords, which is heavier than the universal halving of the FIT to 21p/kWh which comes into effect on Monday, was widely expected to render most of their photovoltaic schemes unviable, leading to many schemes being abandoned.
However, renewables specialist Strategic Energy has created a lease system that will enable it to install ‘free’ PV for landlords at the 16.8p/kWh rate. The Yorkshire-based firm worked with Ernst & Young, the Council of Mortgage Lenders and five law firms - Trowers & Hamlins, Addleshaw Goddard, Cobbetts, Croftons and Hammonds to create an offer to cover landlords’ legal costs to make schemes more viable and quicker to install.
The company has a pure equity model with two backers - one of which is an institutional investor - which means none of the returns from the FIT need to be used to pay the cost of debt. It has installed PV on 400 St Vincent’s Housing Association properties so far.
The framework also has the approval of banks including Santander, Barclays, HBOS and Dexia. Previously landlords and solar providers have struggled to obtain lenders’ consent for rent-a-roof deals.
Martin Davidson, managing director of Strategic Energy, said: ‘There is no reason for landlords to stop their PV schemes.’
Inside Housing’s Green Light campaign calls for landlords to be given equal access to vital green subsidies so the sector can protect tenants from fuel poverty.