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Reduced system costs and rising electricity prices make a strong case for behind the meter solar PV installations in businesses across all scales. This is a mature, low maintenance technology with plenty of headroom for growth as we move towards a net-zero carbon economy.
There is currently around 13GW of solar deployed across the UK but the Committee on Climate Change estimates we must deploy 54GW by 2035 to meet our net-zero carbon emission targets.
This will require the development of industrial and commercial (I&C) scale (largely rooftop) and ground-mounted utility-scale solar farms, both of which offer excellent opportunities to deliver strong returns.
Maximising returns from smaller I&C Solar PV
While exported generation can still bring in revenue by way of the Smart Export Guarantee (up to 5MW) or a Power Purchase Agreement (PPA), the best returns are realised where generation is consumed onsite.
Many businesses operate primarily during daylight hours, offering a good match between solar generation and consumption. When this is not the case, changing work patterns or combining the solar with battery storage can help maximise the benefit.
Businesses with the right level of on-site usage, available roof area and south facing aspect, can expect a return on investment as high as 20%. With almost no maintenance and a lifespan of 20+ years, that makes for an attractive investment. These businesses also benefit from enhanced green credentials and reduced carbon footprint, at a time when such factors are becoming ever more important.
Maximising larger I&C Solar PV returns
Many larger businesses have multiple sites and this can bring increased opportunity for solar PV. Such businesses can maximise returns from their solar PV investments by taking advantage of the specific conditions at each site.
For example, a business with a large distribution depot, factory or warehouse in an out-of-town location may have extensive roof space for solar, or even land suitable for ground-mounted solar, but little onsite demand.
This business could agree a ‘sleeved’ PPA agreement with their energy supplier, effectively exporting the energy generated at these out-of-town sites to be used on their higher consuming sites. This model gets around the need for local onsite generation whilst still maximising inhouse consumption and benefit.
Where a business doesn’t have the available area of land required for a solar system, an option is to approach a local landowner to lease a neighbouring area of land or seek a third-party developer to build the project and sell back the electricity under a favourable PPA.
Developing utility-scale solar farms
A significant reduction in the CapEx and OpEx of solar farms has contributed to a marked upturn in the development of subsidy free, utility-scale, solar farms.
The absence of a subsidy from March 2019 removed the artificial rush to meet FIT and ROC deadlines, allowing developers to concentrate on taking time to find the right sites and deploy commercial models that reduce cost.
Some development models include securing long-term corporate PPAs and in some cases co-locating batteries. PPAs help to increase the return of investment by providing a predictable long-term revenue stream, while battery storage allows export to be shifted from point of generation to peak times.
Developers recognise the positive prospects for utility-scale solar farms and many are already building a portfolio of sites in advance of expected policy support and cost reductions. This support has matierialised with the recent announcement from BEIS that both onshore wind and solar projects will be able to take part in the next round of the Contracts for Difference scheme, which opens in 2021.
Locogen has extensive experience in the development of solar PV projects throughout the UK, and in France, working across all project scales and at every stage in the development, construction and operation.
Our solar PV services include:
- Site identification
- Energy use/yield analysis
- Financial projections
- System design
- Asset Management