Activia Solar: Rooftop PV Perfect For UK
Michal Bacia, a solar energy project manager and consultant who has extensive experience in British and European markets, explains why rooftop solar is the best choice for the UK economy right now. Even with the British weather!
The UK solar industry (at least some companies) do not share my excitement about this shift in government strategy. They are worried about a decreasing support for large scale solar farms, which is completely understandable when they have a pipeline of utility scale projects already lined up. An announcement of lower support for solar farms means they have to hurry up and build them ASAP. Without enough qualified manpower, building all these planned projects before March 31st 2015 will be difficult.
For the general public, a green light for DG solar is great news and here is why. Renewable energy (RE) was an environmental concern in the beginning. The EU pushed RE obligations because it was concerned about the CO2 and climate change. When the conversation is about the environment or future generation's survival, you can't really put a price tag on it. It's a political issue, not a business one. Germany and Denmark said OK, we want clean air and low CO2 emissions and we are willing to pay for it with high electricity prices. Others, who were not so interested in the environment, said NO WAY, RE is too expensive, high energy prices will kill our economy, we will loose jobs, etc. For them, RE was a luxury they couldn't afford. In reality, the question of how RE influences economy is more complicated. It's far more than just a question of how much energy costs. It's a question of where does that money go.
Global energy needs
In the "˜90s, the UK was an energy exporter. Thanks to natural gas and oil resources, the country was able to cover all its energy needs with domestic resources. They were even exporting surplus. In the mid 2000s, however, the situation changed completely. Production from the North Sea dropped and the country had to start importing energy. According to the US Energy Information Administration (EIA), in 2011 alone, the UK imported 388,000 barrels of oil per day. Given the average oil price of USD 111 or GBP 68.82 per barrel, this amounts to an annual spending of GBP 9.5 BILLION! And this is just the oil alone. Other energy imports included natural gas, coal, uranium.
What does this mean for the economy? Exporting jobs. Instead of spending all this money domestically and creating local jobs, it is sent abroad. It was estimated for the US economy that each $1.00 spent at the gas station generates $0.40 revenue for the national economy... the rest goes ABROAD. Each $1.00 spent on domestic oil generates $3.00 for the national economy, thanks to the multiplier effect. The ratios for the UK might be different, but the essence is the same: money that stays within the economy circulates, creating more jobs and generating more taxes.
Price fluctuations
This relation is even more evident when oil prices go up. James D. Hamilton, Professor at the University of California, noticed that 10 out of 11 recent economic recessions in the US, were preceded by a sharp oil price increase. In the developed countries, the oil imports are relatively small compared to the national economy: about 2% of GDP but the influence of oil price spikes is non-linear and therefore, much more significant. It takes time and capital expenditure to adjust to new, higher prices of energy. Think of new energy efficient buildings or buying smaller, more efficient (electric) cars. It take a while to adjust.
Short term, more expensive oil and/or energy makes people stop spending money on other things. More comes out of their pocket for the same amount of energy to drive to work, heat the house, etc. Automatically, people spend less on other things. This means that any businesses providing these services/items sell less, earn less, and most likely have to fire people. This begins a cycle of an even lower demand for goods and services or no orders at all from manufacturers and factories. And the downward spiral continues....all because oil has no easy substitutes. Prices are driven by international markets and are controlled by a small number of organizations. Denmark's example shows that it's OK to pay high electricity prices, as long as the energy is produced domestically. Danish electricity prices are about twice as high as British prices, yet GDP per capita in Denmark is higher than the UK and the unemployment rate in slightly lower in Denmark.
Obvious solutions?
So it looks like generating domestically is an answer but assuming that all energy resources are domestic it is best to go for the cheapest energy option, right? Well, let's see.
Electricity produced and delivered by the Big 6 energy companies in the UK are perceived as the cheaper option to renewables, especially rooftop solar. It is interesting to see what happens to the money paid in utility bill. In 2012, the Big 6 British energy companies made a combined profit of £3.7 billion. Between 2010 and 2013 energy prices rose by 36%. Out of the 6, only 2 companies are actually British. Again, the supply side of the energy market is controlled by a small number of organizations, allowing for a massive transfer of value from customers to corporations.
Promoting solar DG changes the balance of power. Instead of the Big 6 energy suppliers, the government wants to have 60,000 (distributed) suppliers. This means that the support (in a form of FiT, for example) will be distributed among many small and mid-sized companies, families and NGOs. The money collected from consumers in energy bills to support RE will go straight back into local communities. BTW, more than half of the solar installation costs are local costs (planning, engineering, construction, maintenance, financing). With solar, there are no fuel supply issues. This means less money spent on (imported) fuel and more spent or invested locally. This also means energy price spikes will have less influence on the economy. Finally, there is no need to invest in the electricity transmission and distribution network as most energy is consumed on the generation site.
Crowd support
Add solar crowdfunding into the mix and we have a perfect solution for energy self-sufficiency and prosperity! With crowdfunding, people invest directly in energy generation projects. This means that no matter what happens on the market, they will benefit.
In cases of generous support for solar and higher electricity bills they will receive higher returns on their solar investment. When support is lower and energy prices are lower they experience the immediate benefit of lower energy bills.
Looks like a win-win to me. Well done UK, congrats!
©2014 Permission required.Angel Business Communications Ltd.
An earlier version of this article first appeared in CleanTechnica
Activia Solar was founded in 2010 and now employs over one hundred people. The company has completed over 220 MWp of solar projects located in the UK, Belgium and Germany. Activia is experienced with rooftop installations from 3kWp and ground mounted farms as big as 15MWp. The company focus for installations is on high quality DC cabling, expertise include ground works, construction, fences, installation of structures, panels, inverters and electric cabinets. Activia also provides maintenance and repair services for solar pv systems. The company is established with the necessary financial and technical resources to be a secure partner.
