The Old Oak and Park Royal Development Corporation (OPDC) is developing a whole new centre and community for west London, and as part of this project, they are undertaking a sustainability initiative at the adjacent Park Royal industrial estate. In particular, they are looking to meet the Greater London Authority’s objective to promote the use of roof mounted solar photovoltaics (PV) for the ~2,000 businesses located in Park Royal.
PV is a technology which generates renewable electricity using the sun’s energy, and offers a number of benefits including a reduction in carbon footprint, meeting corporate sustainability commitments, as well as significant financial benefits through electricity bill savings. There is also the potential to achieve significant economies of scale through the bulk purchase of equipment and the bundling together of other energy services, using public sector support. This means that the more businesses that sign up, the more there is to gain in terms of potential cost savings.
OPDC have appointed Verco, a sustainability consultancy, to establish the technical potential for PV and hence the commercial benefits at Park Royal, which they have recently completed. If there is sufficient interest from businesses, OPDC and Verco will develop the project, including inviting PV suppliers to tender and awarding the contract.
What is PV?
Solar panels or photovoltaics (PV) are a form of renewable energy generation that capture the sun’s energy using photovoltaic cells. The cells are made of semi-conductors which convert light into electricity which can then be used in the same way as grid-supplied electricity. Solar cells are contained in a panel behind glass, called a “module” and multiple panels are usually connected together to form a solar “array”. Arrays can be mounted on the ground, on roofs or on walls. For areas like Park Royal where there are a lot of buildings, roof-mounted arrays will produce the most amount of electricity. PV works best when exposed to direct sunlight but it can also generate electricity on cloudy days.
What are the benefits of PV?
As a means of generating renewable electricity, PV can offer a number of benefits, including a reduction in carbon footprint, protection against rising energy costs, meeting corporate sustainability commitments, and meeting customer expectations.
In addition, the results of the initial assessment carried out by Verco suggest the potential for attractive financial returns, subject to more detailed investigations of specific buildings.
What the overall financial benefits of the project?
Headline figures for all of the buildings collectively suggest an unleveraged Internal Rate of Return of 13%. This is over a 25 year period which is the typical lifetime of a PV project.
What are the benefits to you of participating in this project?
There is the potential to achieve significant economies of scale through public sector involvement including the bulk purchase of equipment and the bundling together of other energy services. This means that the more businesses that sign up, the more there is to gain in terms of potential cost savings.
OPDC and Verco will be exploring various procurement and commercial delivery structures to determine the optimum arrangement. If there is sufficient interest in taking this forward, OPDC and Verco will use our expertise to develop the project, including inviting PV suppliers to tender and awarding the contract.
What do we need from you?
OPDC and Verco would like to discuss this opportunity with you in more detail, initially by phone. We can then explain to you in more detail how the project might work. If you are still interested, we will explain what the next steps are, which will include a visit to your site to conduct a visual survey of the buildings under consideration for PV.
We would be grateful if you could let us know who the best person to speak to might be and what their contact details are. If you are a tenant, it would also be helpful to know who your landlord is, and some general information about your lease, such as its length and whether it mentions the installation of PV on the roof of the building.
OPDC are contacting a number of businesses on the industrial estate regarding this initiative so you may already have been contacted by OPDC about this initiative. If you have not and would like to know more, please get in touch with Sarah Spateri, Park Royal Business Group Manager – E-mail email@example.com
For technical queries and to arrange a visit please also include Bethan Phillips from VERCO : firstname.lastname@example.org
How much energy can a PV array generate?
This depends on how much roof space is available, its orientation (ideally between east and west facing) and slope. As a guide, 1000m2 of panels on a low pitched roof at Park Royal could generate more than 144,000kWh of electricity per year. This takes into account typical weather conditions, including cloudy days when PV is still able to generate electricity. To give an idea of scale, a 15,000m² warehouse might consume around 510,000kWh so this is a significant proportion of total consumption.
How much will this cost my organisation?
The cost to your organisation depends on:
1. The business model selected. If the option selected is for businesses to invest directly in the panels, then the cost will be dependent on how many panels are installed (see point 2). However, alternative arrangements may be possible where no upfront investment is required – either by taking advantage of low interest loans available from the Mayor’s Energy Efficiency Fund (MEEF) which has been established by the GLA, or from equity provided by specialist PV developer companies, or a combination of these.
2. How many panels are installed. This in turn is dependent on the space available, and how much electricity the building consumes over the course of a 24 hour period. Ideally, the output of the PV system and hence the panel area would be matched to your electricity consumption in order to ensure most of the electricity is consumed on site rather than exported to the grid because this will maximise the financial performance of the project. To give an indication of cost, 1000m² of panels could be in the region of £130k.
3. Maintenance costs are minimal for PV systems (see 2.8). We have factored in maintenance costs into our financial modelling. Assuming economies of scale through joint procurement of maintenance contracting, an indicative cost is £2.5k per year for a 1000kWp system.
How much will this save my organisation?
The return on investment (Internal Rate of Return) for this is estimated to be 13% for a bulk procurement option, with higher returns of around 25% available or more where MEEF finance is used. The monetary savings to your organisation will depend on the business model selected, and is also dependent on the amount of PV installed and how much you pay for electricity. To give an idea of scale, with 1000m² of panel, and an electricity cost of 11p/kWh, the annual saving could be just under £16k (assuming all of the electricity generated is consumed on site).
What procurement and commercial delivery structures are available?
A number of possible approaches are possible. These range from a bulk procurement approach led by OPDC in which the businesses provide upfront capital investment, to bulk procurement via a lease or lean, through to the creation of a specific project entity, such as a Special Purpose Vehicle or Community Interest Company. Some of these options may benefit from low cost public sector loans and/or from equity from PV developer companies (see above). We would like to discuss this with you in more detail to explain the options available and the pros and cons of each.
What happens if I’m a tenant and I’m interested in this?
Whether or not you are allowed to install PV on your roof depends on the nature of your lease. Permission is likely to be required from your landlord, and we would be keen to discuss this opportunity with them, if possible.
How long will this process take?
OPDC are keen to progress this as soon as possible, ideally issuing a tender to a PV installer in the next few months. Agreement from your electricity distributor is needed which may take several weeks. Installation itself can take place relatively quickly, depending on whether or not scaffolding is required.
How long do PV systems last?
The panels will last at least 25 years, which is the typical length of warranty provided by manufacturers. For this period, they will continue to close to maximum capacity, and this output level usually forms part of the warranty. Electrical inverters are also a key component in a PV system, and may require replacement after about 10 years.
How do I know whether the roof of my building is suitable for PV?
If your organisation is interested in proceeding to the next stage, we will come to visit your site with a structural engineer and conduct a visual survey of the buildings and their roofs, as well as the locations of electrical plant rooms.
How much maintenance is required, and who will be responsible for this?
There should be minimal maintenance required, although regular monitoring of the system performance and cleaning is required. The responsibility for this depends on the contractual arrangement selected, but this is often outsourced. It may be possible to procure O&M services collectively at a reduced cost.
Can the projects deliver benefits to the local area?
Depending on the business model chosen, there may be opportunities to deliver benefits to the local community. One option is to set up Community Interest Company, which exists primarily to deliver benefits to the community. Such arrangements can also benefit from grant funding. It may also be possible to directly share the generated electricity with communal uses such as street lighting if an approach is taken to directly connect businesses and other energy uses. This type of arrangement could also take advantage of other technologies such as battery storage and EV charging, for example, but would be more complex to set up.
What technical information will you need?
As mentioned in above, we will need to conduct a visit to your site to carry out a visual survey of the roof and plantrooms. We will also need some detailed information from you including:
• Freehold/leasehold arrangements – are you a tenant or landlord; if the former, who is the landlord; does the lease mention the installation of PV on the roof
• Half hourly energy consumption data for the building
• Detailed roof plans if available
• Roof age, any condition reports, and information on roof warranties
• Electrical infrastructure location and configuration; grid connection details
• Energy supply agreements
• Any building-specific constraints which might limit where PV panels or equipment could be located.