Whether it’s through direct mail, advertising or the odd cold-call, renewable energy providers enthusiastically promote their wares to agribusinesses; it’s a highly competitive market.
Despite a sluggish economy and cuts to the Feed-in Tariffs, the renewable energy market is growing fast, with a plethora of providers entering and leaving this emerging market.
With so many companies to choose from, how do you select a reliable, quality provider that will offer both value for money and represent your best business interests?
Selecting a renewable energy provider is not usually an early priority when it comes to a renewables project and it may seem all the core research has already been done; you’ve considered the practicalities of the site, devised a financial model and are clear about the scheme’s status when it comes to taxation.
But selecting an energy provider also requires careful consideration and a structured approach; the set-up costs of an energy installation can be significant and choosing a provider that best complements your business can have a direct impact on return on investment.
Here are ten key topics to discuss with a provider and help assess whether they are the best choice for your business.
1) Existing installations
The first question to ask is: how many installations has the supplier carried out? Can you visit those sites and speak to the property owners about their experience with the firm?
For example, with solar schemes there are a lot of domestic installers, with a substantial amount of experience under their belt, that are keen to break into the commercial sector and they do offer some very attractive rates.
But there are significantly different challenges associated with farm and commercial scheme designs, for example, the electrical system has to have a far greater capacity and its design demands a higher level of technical expertise.
However, it’s also worth bearing in mind that all installers have only been working in the industry for a handful of years, and it would be unreasonable to expect more than a couple of years’ experience.
2) Pricing structure
It is all too easy to get impressed by low prices quoted for installations, but there is usually a reason for the low figures. Is the supplier taking into account planning fees, grid connection costs and surveys – whether for structural engineering reports for solar or ecological surveys for wind and hydro?
Depending on the size of the scheme, existing electrical equipment upgrades may also be required and could be costly.
It may be obvious, but it is worth checking the VAT status of a quotation, as VAT for a commercial renewable installation is treated differently from residential.
3) Estimations of output
No installer will give an absolute guarantee of output, but they often provide estimations.
It is important to understand the assumptions made and assess the returns on a best and worse-case basis.
Do the quoted returns take into account the costs of finance, maintenance costs, electricity inflation, quantity of electricity used on farm and the equipment’s rate of depreciation?
If installing a solar scheme, do they make specific reference to the EU solar irradiation data?
4) Accreditation status
All installers must be Micro Generation Certification Scheme (MCS) accredited to receive the Feed-in Tariff.
Seeing a logo on headed paper is useful, but you should check the actual status directly with MCS (www.microgenerationcertification.org), because if the accreditation has run out, the equipment and investment will become worthless.
It is also preferable to ensure Renewable Energy Assurance Listing (REAL) status has been attained. This is a quality code set out by the Renewable Energy Association and is backed by the Office of Fair Trading.
5) Technical expertise
Given that many of these schemes are dealing with high-voltage electricity, technical expertise is paramount.
Installers and those quoting on schemes need to demonstrate that they are more than just salesmen and that they have electrical qualifications in identifying the capacity of lines and transformers.
It is also worth asking whether the installer will deal with the connection application with the district network operator, if they don’t then you will need to appoint an additional contractor to do so.
6) Materials and equipment
For renewable equipment to be eligible for the FiT, MCS approval must be obtained.
As such, each item approved can be viewed on the MCS website, and the manufacturers have a duty to prepare specification sheets.
It is important to use this data to compare equipment on a like-for-like basis. As with all products, there are items to suit all budgets and the efficiency of equipment can vary enormously.
7) Size of firm
This is largely a matter of personal preference. National, large-scale firms tend to have carried out high total capacity of installations, offer quick installation times, and can also offer post-installation services on a nationwide basis, which can be convenient.
On the other hand, instructing local and regional firms attracts a more personal approach, with many firms keen to protect their reputation.
The solar industry, in particular, is a fledgling industry in the UK and it is very hard to assess which firms will be around in 25 years; the choice of the size of firm offers no particular guarantees with regards to quality and reliability.
8) Green credentials
One of the main attractions of the renewable sector is the financial incentive. However, ultimately, renewable technologies help reduce greenhouse gasses where carbon-based electricity production is commonplace.
It is well worth asking what the firm’s green policy covers, if one exists, and what the CO2 savings of the scheme are.
Choosing a local supplier who only works in the region is clearly more beneficial in terms of carbon reduction than using a company who is willing to travel hundreds of miles to carry out an installation.
9) Planning consent
With a full planning application or at least a prior notification application being required in nearly all commercial renewable energy development cases, it is important to consider who will take responsibility for gaining the necessary consent.
If the installer provides a planning package as part of the deal, this may often be the cheapest way to obtain consent.
However, with many new players and, particularly, overseas firms in the market that may not understand the complexities of the planning system, it is important not to overlook what may, at first, seem like a formality.
You need to ask what planning success, if any, the firm has had in the locality and whether the service is provided directly by the installer or by a preferred contractor.
Clarify what the firm will actually be doing for the fee quoted. While evidence of other planning consents being achieved in the area is not a guarantee of future success, such factors further demonstrate that the installer is experienced in all facets of the market they are operating in.
Unless the firm employs a planning specialist, they may not understand all the potential problems that can arise and so, in many cases, a preferred contactor may offer the best service.
A third-party planning specialist will be well versed in dealing with a range of applications and local authorities and should be able to identify potential pitfalls and suggest solutions from a less directly involved perspective.
Whether an in-house or external provider is used, it is important to be aware that planning may be the greatest upfront cost and, with no guarantee of success, it is essential to get the best advice as early as possible when considering a new project.
10) The bigger picture
All too often installers don’t look beyond the specific installation where there are wider legal and statutory issues to consider.
Dealing with wind turbine sites, this could be as simple as asking questions about land tenancy situations or the ability to gain access to turbine sites over third-party land.
It is not uncommon for a landowner to reach agreement with a provider for an installation without making consideration for a secure tenant, which could make it impossible to secure access, leading to an unviable project.
By discussing these ten topics in depth, and spending time researching the work of the renewable energy providers vying for your business, you will get beyond the headline rates of return that can be used to hook your initial interest.
Appraising firms’ products and services in detail will also make it easier to devise a more accurate model of what the scheme means to your business.
• Gareth Lay is renewable energy expert at property consultant Bruton Knowles.