The government's recent announcements that support for solar PV will be cut further has led some social housing providers to shelve plans. For example, Camarthenshire County Council has abandoned plans to install solar rooftop PV on around 2,700 council homes. However, some social housing providers are taking the view that any contribution that can be made to reduce the fuel poverty of tenants is worthwhile, regardless of the reduction in available government subsidies. This is the approach that is being taken by the Northern Ireland Housing Executive.
This is likely to be reinforced by the government's call for the social housing sector to make further efficiency savings, which will include finding new ways to raise revenue as well as reduce costs, and a number of social housing providers may take the view that such an additional revenue stream - combined with the benefits for their tenants - is still worth considering.
There are numerous reasons why a social housing provider may wish to install rooftop solar panels. Such an installation could be a flagship scheme within the community and exhibit the value of renewable energy projects. It could also lead to substantial costs savings. An installation should:
The Feed-in-tariff (FiT) scheme is intended to encourage the uptake of small scale renewable and low-carbon technologies with a total installed capacity of up to 5MW. The owner of such a system receives payments based on each kilowatt hour (kWh) of electricity produced. Payments are made over a 20 year period for the electricity generated (the generation tariff, which is a fixed payment for every kWh generated) and also for any electricity exported back to the national grid (the export tariff, which is a guaranteed minimum payment for every kWh).
Tariff payment rates vary and are adjusted annually. The current rates are available on the Ofgem website and the Government’s consultation period on the future of FiTs recently closed. The outcome of the consultation exercise is awaited with interest by the renewable energy industry.
Who owns the roof?
If the panels are to be installed on a multi-occupied building, it is likely that the social housing provider will own the roof. Therefore, it will be able to install the panels but may still need rights of access to individual properties to configure associated wiring. Whether or not the social housing provider, as landlord, has appropriate rights of access will depend upon how the tenancy agreements are drafted. However, it is usual for a landlord's rights of access to be restricted to inspecting and maintaining existing installations; not carrying out improvements. In such circumstances, the individual tenants would have to consent to the installation.
If the property is a house, the landlord is unlikely to have sufficient access rights to install solar panels on the roof and the tenant's agreement would be required.
What other approvals will be needed?
Permitted development rights, which effectively give planning permission without the necessity of actually obtaining a planning permission, are available for some solar PV installations provided that certain conditions are met. Whether permitted development rights will be available, and the conditions that need to be fulfilled, will depend upon where the property is located, as the rules differ in England, Wales, Scotland and Northern Ireland.
If the property is charged, lender's consent is likely to be required.
Who will pay for the installation?
The installation is likely to be an improvement. In most cases a landlord cannot recover the costs of making improvements from tenants.
Whether or not the landlord can recover the costs of maintenance of the panels from tenants will depend upon how the tenancy agreements are drafted. In most cases, there will be no obligation on tenants to contribute. As the social housing provider will receive the benefit of any FiTs, tenants are unlikely to agree to make any contributions towards maintenance where they are not contractually bound to do so.
What is the EPC rating?
The highest rate FiT generation tariff is available for buildings with an EPC rating of band D or above. That means that if the building on which you are intending to install the panels has a rating below D, you will not be able to obtain the highest FiT generation tariff.
A low EPC rating could be even more problematic in the future. The recent consultation on the review of the FiT scheme states that the government is considering raising this higher tariff band from D to C in the future. Furthermore, properties that do not meet this minimum C rating, will not be eligible for the FiT scheme at all.
The government's rationale for these proposed changes is to encourage property owners to make other energy efficiency measures in preference to rooftop solar. If the property is already fairly energy efficient, support will be available through the FiT scheme; if the property does not meet minimum energy efficiency criteria the property owner should carry out other works before moving on to the installation of solar panels on the roof.
Schools and community projects are currently exempt from the requirement to meet a D rating in order to be eligible for the higher rate tariff. The government consultation proposes keeping this exemption in place when the rating is raised to C, and also adding fuel poor homes to the exemption. Therefore, social housing may be an area for future growth. However, there are no details available as to how this exemption would operate in practice.
FiT rates have been going down. The removal of pre-accreditation from 1 October 2015, coupled with general uncertainty brought about by the release of a government consultation on a review of the scheme, has called a halt to a number of schemes.
However, the future is not all bleak for solar PV projects and social housing providers may be the very landowners to provide a boost for this technology.
TLT has a wealth of experience in dealing with rooftop solar PV projects, including different funding structures, as well as advising clients on their obligations under the EU procurement rules.
Contributor: Alexandra Holsgrove Jones
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com