Industry Eye: Photo Voltaics is the latest green energy option but it

TWELVE months ago, the hot topic and ‘new’ business enterprise was wind turbines; now the press seems to be littered with Photo Voltaics (PV) – the production of electricity from solar panels and I suspect in twelve months time it will undoubtedly be renewable heat incentives (RHIs). In the meantime though, here are some of my thoughts on PV and wind at present.

The PV retailers are on a hard marketing drive and hitting the headlines frequently. This may be in part due to the Comprehensive Spending Review and the Chancellor George Osborne was giving his clearest indication that they will look carefully at the Feed in Tariff (FIT) rates for PV at the next review, which starts in 2012. Many think that there will be a significant change and therefore think there is only a narrow window of opportunity for PV, particularly PV farms.

PV has some good benefits over wind; namely ease of planning (particularly roof mounted systems) as the visual impact is significantly less; longer warranty periods; less moving parts; lower annual running costs and production during daylight hours when consumption is normally at its highest and potentially longer life.

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But in my opinion and experience, the capital cost compared to output is very high and when one costs out the project in full, the payback doesn’t always look as inviting.

The headline figures on PV normally state nine-to-11 year payback, and at first glance look an interesting investment. The key figure that you need to look at is the cost per kW for purchase and installation and the output from the size of the system in kW hours per annum.

Most importantly, don’t forget to budget for the cost of finance, potentially tax on the revenue and annual running costs (be that as simple as extra insurance for the equipment).

I strongly recommend that you cost out the project in full before committing to the purchase as I’ve seen many examples, where a quote has indicated a 10-year payback, but when you factor in the cost of finance and insurance alone, it adds four to six years on the project payback.

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Of course, for some, PV panels may be the only option (due to site constraints with wind turbines, personal choice, or more importantly, lack of wind), but make sure that you go into such a project fully understanding the options and return on capital.

The wind turbine market is constantly changing on a regular basis and it’s key to review the options at each stage, even after planning has being achieved.

We are noticing that many manufacturers are now able to offer better warranty packages, quicker turbine delivery and better after-sales service.

But be very careful on timing, there isn’t much time left to get the project off the ground.

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Planning is not straight-forward to achieve and is the biggest cost and risk involved in such projects, particularly as the height of the machine increases.

If you are interested, I strongly recommend pushing ahead in the next few months, otherwise, you may end up achieving a planning application, but running out of time to erect and install the machine before a potential change in the tariff rate post March 2013.

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