Feed-in Tariffs Scheme and Social Housing
Consultation (2a) on the solar feed-in tariff scheme (FiTs) rates was published on the 9 February 2012 by DECC. They confirmed their decision for a reduced tariff of 21p for installations lower than 4kW from 1 April in respect of all solar PV installations, the eligibility date being 3 March.
Further conditions to deal with multiple installations are covered in the Consultation (2b) document and contain plans to lower the multi-installation tariff rate. This will impact on large-scale social housing projects, but to what extent?
From April 1, any FiT generator or receiver of FiT payments with 25 or more solar PV installations will receive 80% of the standard tariff rate. This means new rates between 8.9p to 16.8 p/kWh.
Addressing as what is seen as over-compensation with the current 20% discount; the Government feels that the reduced tariffs are generous when compared with individual projects.
Based on an assumption that social housing landlords benefit from economies of scale in aggregated projects, the 20% reduction is believed to bring a rate of return equal to that available to individuals on the standard tariff.
There is a strong debate for higher payments to remain so that social landlords can reinvest into projects to address, for example, fuel poverty. The Government therefore intends to support community projects so they benefit fully from the FiT system. They are consequently proposing to offer 'community-owned' multi-installations the on-going tariff of 80% to projects with up to 25 installations.
Taking economies of scale into account, this is conducive to social housing projects to continue. Prospects are much better than their commercial multi-installer counterparts. In addition, the Government is encouraging other ways to assist community projects outside of the limitations of the FITs scheme.
But how can social housing schemes gain the confidence of investors? Long-winded procurement processes, lack of clarity on the FiTs rates, uncertainly of returns - all foster a reluctance to invest.
To address and encourage confidence in the market, the Government aims to provide clarity on the tariff band they allocate; to fix the level of tariff at the point of accreditation; and to define "community" to help community projects by differentiating them from other ownerships.
The written Ministerial Statement by Edward Davey on reforming the FiT scheme can be found via this link.
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Alliance Homes Racing Ahead with the Green Deal
Excellent news from a south west housing association, Alliance Homes. By aiming to become one of the first social landlords to set up as a Green Deal provider, they will give a welcome kick-start for others in the sector to enter the market.
Alliance Homes is clearly a market leader, especially for a small to medium size player - it was expected that only the large social housing providers would consider entering the market as providers.
Furthermore, Alliance Homes is aiming to develop a framework agreement to encompass other social landlords to jointly deliver the Government's massive energy efficiency improvement programme.
Competing with the likes of British Gas, Tesco and other big names, the social housing sector is making an impressive statement of commitment in improving the energy performance of cross tenure housing stock.
Much of the UK's worst performing stock can be found in the private sector. The English Housing Survey shows that almost 70% of the owner-occupied stock emits above 5 tonnes of CO2 per year. This is more than 3 times the level in the social housing stock.
Although this performance is not due to building quality alone, it is because some of the larger properties are generally found in the owner-occupier sector. Alliance Homes' model will address this factor including fuel poverty.
Fuel poverty, together with the ever increasing prices of energy, means that many social housing tenants are not able to heat their homes to an acceptable level.
Alliance Homes is to carry out a feasibility study with a view to launching the proposed framework around April. Achieving economies of scale is central to the delivery of the Green Deal and following their successful social housing PV consortium, Alliance Homes are sure to be exemplars once again.
