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Community solar project to beat government cuts

9 June 2011

Compared to Germany, our government’s response seems laughable.

Howard Johns, MD of Southern Solar and chair of OVESCO Ltd

By Paul Allen.

The UK’s first community-owned “solar power station” has raised the money it needs from local shareholders to start generating energy, ahead of the government’s cuts to the feed-in tariff (FiT). After today’s confirmation that the Department for Energy and Climate Change (DECC) will cut FiT payments to large-scale solar projects (above 50kW), it could be the first and last project of its kind.

When OVESCO, based in Lewes, near Brighton, launched its community share issue on 19 April, the seven directors – all local residents – had just six weeks to raise £307,000 from investors. Failure to meet this target would have made it impossible to install the solar panels ahead of the FiT reduction, which comes into force in August, and would have made the project financially unviable. Today, the share capital exceeds £350,000, of which 99 per cent has come from local investors.
 
The new power station will be housed on the roof of the local Harveys brewery warehouse. According to the OVESCO website, the 544 photovoltaic (PV) panels will generate 92,000 kilowatt hours of green electricity each year – enough to save more than 40 tonnes of CO2 annually. The electricity generated will be used to cool the Harveys beer, Sunshine Ale, with the remainder sold back into the National Grid.
 
OVESCO is structured as an IPS, a non-profit society for community benefit, which allows it to sell non-tradable shares to members of the community. The aim is to repay the money in full at the end of 25 years, while shareholders will receive dividends after the first year. As the directors raised the required capital without taking out a commercial loan or grants, this dividend is expected to be 4 per cent. 
 
The community-owned solar power station now has seven weeks to  start generating electricity. From August, it was confirmed today, FiT payments to any new installations will be slashed from 32.9p/kWh (for up to 100kW) to 19p/kWh.
 
Despite the success in Lewes, Howard Johns, MD of Southern Solar and chair of OVESCO Ltd, the private company arm of OVESCO, is very disappointed by the government’s review and the impact it will have on commercially sized solar power projects in the UK. 
 
“Look at Germany. After the announcement to drop nuclear [power], they have just announced that 50 per cent of their daytime peak [electricity] flow will come from solar [power] by 2020,” he says. “They were also due to cut their solar feed-in tariff but now they’re not going to. It’s phenomenal. Compared to that, our government’s response seems laughable.”
 
If OVESCO is a one-off, however, it won’t mean an end to all community-funded renewable energy projects. Indeed, Johns says that Southern Solar is already looking at two more community schemes. 
 
To sidestep the FiT reductions to larger scale installations, it will be necessary to split these up into smaller schemes. “I think people will always look to the best next opportunity,” he says. “I’m sure that all community-owned [projects] will now be looking at sub-50kW.”
 
Lewes is a well-established centre of community engagement. Home to an active transition group, the town has also launched its own currency – the Lewes Pound – accepted only by local businesses, in order to support the local economy and to start people thinking about the way they spend money. In 2006, it made national media headlines when the Greene King pub, the Lewes Arms, removed Harveys beers to promote its own cask ales. After a vocal boycott by Lewes pub-goers, the chain swallowed its pride and began to stock Harveys once again.
 
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Comments

Alternative energy

Alternative energy or "green" energy is a good choice for all countries to save resources and reduce the cost.Solar power is just one of alternative power,we can also use the wind or the water to produce a low-cost power.