Agenda item

(Director of Housing) To consider the attached report.

The Panel received a report from the Assistant Director of Housing regarding Solar PV to Council Housing.

The Climate Change Act 2008 had been established as a long term national framework tackling Climate Change, it aimed to reduce carbon emissions by at least 34% in 2020 and 80% in 2050. Local authorities and housing associations were seen as having a vital role in reducing carbon dioxide emissions. The reduction of carbon emissions was inextricably linked to reductions in energy consumption and consequently in individual energy costs.

According to USwitch energy prices were likely to increase 4-fold by 2020. one way of tackling the rise in energy costs was to generate free use electricity, using renewable energy such as harnessing energy generated by the sun through Solar Photovoltaic (Solar PV) panels fixed to roofs. This was relatively new technology and cost was quite high. Although over time costs were expected to reduce.

To encourage the use of renewable technology, the Government had introduced a grant linked directly to the amount of electricity generated. The grant was payable through a scheme known as the “Feed In Tariff.” This was available to anyone that owned a renewable electricity system and was payable for energy kilowatt hour that was generated. Whilst the FIT would reduce over time, the rate was applicable at the time the system was installed and registered, and that rate was locked for a 25 year period but then index-linked to RPI. The intention was for these tariffs to cover the initial capital cost of installation and according to the Government, earn a return to the system owner up to 8% p.a. In practice, the Council should earn back the initial capital cost by at least two to three times over the duration of the 25 year tariff if the Council was to fund the full cost of the installation itself.

Procurement Options

The FIT was only available to the owner of the Solar PV installation, which did not necessarily have to be the building owner. The Council paid for, and therefore owned, the installation outright. A third party installed the systems onto the roofs of Council properties and rents the roof space, meaning the Council did not have to pay for the installation. A shared arrangement whereby the Council and a third party jointly funded and jointly owned the systems.

Initial Feasibility Study

(a)        Of the 6,500 Council dwellings, around 5,250 properties could benefit from Solar PV. Around 19% of all Council properties would not benefit from some free electricity.

(b)        If all 5,250 properties were to have Solar PV, the capital outlay needed to install the systems would be in the region of £50 million.

(c)        If all 5,250 properties were to have Solar PV, collectively over 10,500 MW hr of electricity could be generated, which over a 25 year period could qualify for £155 million in FIT.

(d)        In addition to the FIT, £26 million worth of free electricity could be generated.

(e)        If the Council was to allow the tenants and leaseholders to use the free electricity generated, and rely only on the FIT and export of unused electricity, then the pay back period for the initial capital outlay was estimated to be around 9 years.

(f)         The rate of return was greater for flats and maisonettes, than for houses or bungalows due to the larger roof areas.

Option Appraisal

Below were the four main groups of properties that made up the Council’s housing stock:

(i)         Sheltered Accommodation

The sheltered accommodation blocks generally had larger uninterrupted roofs, which could benefit from a greater number of solar panels and therefore generate a greater amount of electricity. At sheltered accommodation sites, the Council were also using a lot of electricity powering essential communal services. The amount of electricity generated would not be sufficient to power all of these elements. However, it could contribute towards the running costs, and therefore reduce the Council’s energy bills.

(ii)        Flat Blocks and Maisonettes

Maisonettes had larger uninterrupted roofs than houses, which could benefit from a greater number of solar panels and generate a greater amount of electricity.

(iii)       Houses and Bungalows

The smaller roof areas and the individual nature of each installation would mean higher initial installation costs per kWhr of electricity generated. Since this category of property was constrained in terms of electricity use, the Council would not benefit from any reduced energy consumption.

(iv)      Rural Communities

According to Government statistics, residents living in rural communities were 29% more likely to fall into fuel poverty. Properties located outside of built-up areas tended to be more exposed, requiring more energy to heat them. In recognition of this, the Council’s Repairs and Maintenance Business Plan and its Housing Energy Efficiency Strategy both identified this group of properties to be the focus of any developments in renewable energy opportunities.

Proposed Way Forward

The properties that would benefit the most were those with the largest roof area, that were orientated south and where electricity was being consumed during the day as well as in the evening. On that basis, installing a Solar PV system onto sheltered housing blocks would have the greatest benefit and see the greatest return. It was therefore recommended that the Council install Solar PV itself to all suitable sheltered housing blocks, received the FIT and used any electricity that was generated to power the communal services, thereby reducing service charges for residents.

The funding for such an installation programme, estimated to be in the region of £2.25 million based on the initial feasibility study undertaken by Climate Consulting Ltd, would need to be taken into account as part of the Council’s Capital Strategy, Housing Capital Programme and the HRA Business Plan.

RECOMMENDED:

(1)        That the report regarding Solar PV to Council Housing be noted;

(2)        That the Cabinet be asked to agree to the proposed approach to a programme for the installation of Solar PV;

(3)        That any future Solar PV programme be based on the following:

(a)        that sheltered accommodation blocks be fully funded by the District Council with any free electricity being generated used to power communal services, and for the District Council to receive the “Feed In Tariff;”

(b)        that flat blocks and maisonettes be installed by third party companies with its own private finance based on “Rent a Roof” scheme, with the landlord’s communal services and individual residents benefitting from free electricity generated; and

(c)        that houses and bungalows be installed by third party companies with their own private finance based on “Rent a Roof” scheme, with individual residents benefitting from free electricity generated subject to tenants requesting the installation.

(4)        That the Capital Strategy, Housing Capital Programme and the HRA Financial Plan take account of the £2.25 million funding needs for the installation of Solar PV;

(5)        That any income from the “Rent a Roof” scheme be used to top up the energy efficiency programme for the benefit of those properties that are not suitable for Solar PV; and

(6)        That a further report be considered by the Cabinet on the proposed detailed arrangements for the “Rent a Roof” scheme including the selection of the provider.