incentive-bannerimage

Incentives and Finance

The UK government is committed to making a significant reduction to carbon emissions over forthcoming years and to achieve this they need to encourage widespread adoption of renewable energy technologies by industry, commerce and the residential sector.

In April 2010 incentives were introduced which, when coupled with energy savings, provide a very attractive rate of return on your initial investment and a reduced payback time. The savings on your bills and income from the incentives will depend on your building, energy use and the traditional fuel you are replacing. Solarsense can provide a detailed projection of the savings you can make specific to your building as part of your installation.

There are many different incentives and finance offers available to help you purchase and pay back your renewable product, an introduction to each can be found below.

For a detailed analysis of your current energy use, and advice on how we can maximise the incentives you are eligible for, contact a member of our commercial team.

The department of Energy and Climate Change (DECC) has sought to clarify details about when changes to the feed-in tariff will come into force, however, the department is understood to be sorting through more than 55,000 responses following a huge backlash.

This backlash, along with the fact that, any changes to the feed-in tariff – which is secondary legislation – requires a statutory instrument. If the change is considered negative then 40 parliamentary days notice must be given. It could be until March 2016 before the feed-in tariff rate is amended to new proposals, far beyond the 1 January date set out in the impact assessment.

The Feed in Tariff was created as an incentive to accelerate the uptake of solar PV in its infancy, designed to reduce over time and eventually phase out. It has achieved its objective of making the technology more accessible and acceptable.

Short-term there is the added bonus of these parliamentary delays which allow you to maximize your return on investment and reduce your payback period. The current FIT is set to only reduce by 3% in January.

For a full FIT table and further information please visit the Ofgem website by clicking here.

The Renewable Heat Incentive (RHI) was introduced in November 2011 for Commercial properties. The RHI will pay system owners for every kWh of heat that is generated and used within your building. Currently you can receive the RHI for both Solar Thermal systems and Heat Pumps (Air Source/Ground Source).

The payment for the RHI will vary depending on the type of technology you install, the capacity of the installation and how much energy you actually use. The payments are guaranteed for 20 years and will be paid every 3 months.

The RHI decreases the payback time on your renewable heat technology and also provides and investment opportunity for your business. 

To get more help and information on the RHI contact a member of the Solarsense team.

All electricity suppliers in the UK are governed by the Renewables Obligation (RO) that year on year requires them to supply their customers with an increasing percentage of electricity generated from renewable sources. This is one of the principal mechanisms for ensuring that the UK meets the 15% of electricity generation from renewable sources by 2020 target that we have committed to en-route to a low carbon economy.

Renewable Obligations Certificates (ROCs) are electronic certificates awarded by OFGEM to renewable energy generators at differing rates depending on the technology. Each ROC certificate represents a tradable commodity of renewable energy, and has a value partly set by OFGEM, partly set by the energy supply market.

The ROCs awarded to generators can then be sold directly or indirectly to energy suppliers who present these in turn to OFGEM to fulfil their RO need. If a supplier fails to submit sufficient ROCs to meet their obligation then they are fined for the shortfall according to that year’s Buyout Price. The money accumulated by OFGEM in fines is then redistributed back to the energy suppliers that have presented sufficient ROCs to OFGEM. This mechanism acts as an incentive to suppliers to acquire ROCs form generators.

The RO for the 1st April 2013 – 31st March 2014 period requires all UK electricity suppliers to present OFGEM 0.206 ROCs for every MWh of electricity they supply, by August 2015. The OFGEM Buyout price for 2013 -14 is £42.02 per ROC.

Following the recent DECC RO consultation on solar PV, the following rates of ROC allocation have now been set

2013 / 14
1.6 ROCs per MWh from ground mounted solar PV generators;
1.7 ROCs per MWh from roof mounted solar PV generators

2014 / 15
1.4 ROCs per MWh from ground mounted solar PV generators;
1.6 ROCs per MWh from roof mounted solar PV generators

2015 / 16
1.3 ROCs per MWh from ground mounted solar PV generators;
1.5 ROCs per MWh from roof mounted solar PV generators

2016 / 17
1.2 ROCs per MWh from ground mounted solar PV generators;
1.4 ROCs per MWh from roof mounted solar PV generators

After the 31st March 2017 the ROCs scheme will be closed to new entrants. Accredited generators will receive ROCs for a period of 20 years from the date of registration of their generator.

For solar PV generators, the system owner has a one-time choice when registering their system between FITS or ROCs, where the size of the generator lies between 50kW and 5MW. Above 5MW ROCs only are available as a generation subsidy. Below 250kW the FITS is a higher rate subsidy whereas above 250kW ROCs give a potentially slightly higher return because of the market rate being higher generally than the Buyout Price. There is a degree of uncertainty however about what the future value of a ROC will be as more renewable energy generation comes online. The latest online auction price for ROCs (March 2013) was £43.76. This would make a kWh of solar generation under the ROC subsidy worth 7 pence per kWh for ground mounted and 7.4 pence per kWh for roof mounted, compared with the rate of 6.85 pence per kWh for >250kW FITS registered solar generators that will apply from the 1st May 2013.

To further complicate matters the Government will shortly announce the replacement system for RO which will be based on FITS or Contracts for Difference with a strike price for low carbon and renewable energy.

Solarsense has partnered with Clear Asset Finance to deliver our commercial clients with an asset finance offer that makes sense. 

The option of assset finance allows your company to install a renewable energy system and pay the finance off over a fixed period. In many commercial cases the asset finance quarterly payments will be less that your savings on electricity and payments received from incentives such as FITs, ROCs and RHI. This means that with asset finance you could be cash positive from day one.

To find out how asset finance can benefit your project contact contact a member of the Solarsense team.

Although the price of renewable energy installations has fallen considerably over recent years, sufficient financial capital is still a limiting factor for many farmers.

The Agricultural Mortgage Company (AMC) now has access to European Investment Bank (EIB) funding which can provide subsidised interest rates (often 2.8-3.5%) for loans over £25,000.

Please contact us to discuss the latest financial products available.