Green vision

Opportunities in the renewables space are constantly evolving as government incentives come and go. But contractors willing to take the plunge could fi nd themselves increasingly in demand

At some point over the past five years most electrical contractors probably at least considered getting involved in renewables. Generous feed-in tariff s for solar photovoltaics (PV) in 2011 led to a boom in installations, which was then followed by a deep bust when the tariff s were reduced drastically in 2012.

That led to many companies either scaling back PV work or pulling out of the market. It may have led some contractors to conclude that renewables in general – including wind turbines, heat pumps, combined heat and power (CHP) technologies and anaerobic digestion plants – were all too much of a gamble. It also seems to have led to some contractors deciding not to pursue becoming microgeneration certification scheme (MCS) certified, or letting it lapse.

> Rooft op solar PV panels at the Hitachi Rail factory in County Durham

‘The key for contractors will be in specifying highly effi cient products so customers can take advantage of both minimum running costs and the RHI’

And yet, renewables could still off er significant commercial opportunities – and already do for many electrical contractors. Solar is still the most obvious route into the market, but there is strong potential for growth in other renewables too. Government schemes, such as the renewable heat incentive (RHI) and the Green Deal, may also help persuade homeowners, businesses and other organisations to invest in these technologies. on price in the small-scale domestic market, now usually served by smaller, local companies. Contractors that do work in this market must learn to live with the unpredictable actions of government: the PV industry is awaiting a review of the FITs later this year.

The election is also a concern for those working on onshore wind projects, particularly should the Conservatives be elected. Wind is controversial, on and off shore, but the UK now has the third largest installed base of wind energy generation equipment in Europe, with 12.4GW of capacity, behind Spain (23GW) and Germany (39GW).

It is also a source of work for some electrical contractors. For example, Lotus Electrical Services, based at Kirkgunzeon in Dumfries, has installed mid-voltage connections between wind turbines and local substations at sites including the 36MW Fairburn wind farm, near Loch Achonachie in Ross-shire; a 20-turbine installation that can power 40 per cent of homes in Inverness; and a 15-turbine, 30MW wind farm at Dalswinton in Dumfries. Other contractors have developed expertise in smaller-scale wind installations.

Warming up

The heat pump market has also endured government-induced stress in recent years, particularly during the long wait for the domestic phase of the RHI. Nonetheless, installations have increased. Sales of air-source heat pumps across the market are forecast to rise from 18,000 in 2013 to over 50,000 in 2017, according to figures from the Building Services Research and Information Association (BSRIA). “We have seen a slow build-up in both awareness and sales over the past six years,” says John Kellett, product strategy and marketing manager at Mitsubishi Electric. “As more people understand the benefits of the RHI we are seeing an increase in interest.”

50,000:

The number of air-source heat pumps expected to be installed in 2017

> Dimplex A-Class air-source heat pump

Mix and match

The RHI has been running for non-domestic installations since 2011 and for domestic dwellings since April 2014. RHI payments continue for 20 years in non-domestic installations and seven years for domestic buildings. This should provide a tax-free return of around 12 per cent a year, compared with the 5-8 per cent returns off ered by the various feed-in tariff s. However, the budget for the RHI only runs until April 2016, so we will have to wait at least until after the general election in May before we are sure about its longer-term future. The Green Deal, a loans scheme for householders seeking to make energy eff iciency home improvements, has been slow to take off , but it should continue to be a source of work for some electrical contractors.

More solar PV installations were completed in 2014 than in any previous year. By the end of 2014 almost 5GW of solar PV panels had been installed, up from 2.8GW a year earlier, according to Department of Energy and Climate Change (DECC) figures. The domestic market was hit most dramatically by the sudden cuts in feed-in tariff s (FITs) three years ago – at the end of 2011 there were 20,000 weekly installations and when the new tariff s were introduced that fell to 800 – but it has recovered. While the market for smaller commercial installations is still sluggish, the DECC’s support for higher FITs is starting to have an eff ect, as is increased activity in larger commercial installations.

Renewable specialist Photon Energy supplies solar PV for large-scale domestic installations, working with developers, for the public sector and on commercial projects. Recent examples include a 1MW scheme at Newton Aycliff e in County Durham for Hitachi Rail, installing 3,800 rooftop panels on the company’s new train manufacturing facility. But Jonathan Bates, Photon’s director and general manager, says it and its peers find it harder to compete

12 per cent:

The approximate annual return on the renewable heat incentive

The pumps themselves have become more eff icient and easier to install, according to Clare Campbell, renewables product marketing manager at Dimplex. “The latest models off er easier installation and quicker paybacks, particularly for larger, older, off -gas private homes,” she says. “The key for contractors will be in specifying highly eff icient products so customers can take advantage of both minimum running costs and the RHI.” Another growth area is hybrid systems, where the heat pump works alongside a conventional gas or oil boiler.

Bristol-based electrical contractor Emmdee Electrical was already working with renewables, particularly PV for newbuild, when it started installing Dimplex’s Quantum night storage heaters in 2013. These store energy during periods of low demand on the grid, only turning it into heat when required. An algorithm running them matches operations to usage patterns and weather conditions. Emmdee managing director Lee Bignell says electrical heating solutions, installed in newbuild or replacing existing systems across southern and SW England, the Midlands and South Wales, now account for between 10 and 15 per cent of the company’s turnover.

Anaerobic digestion (AD) and biogas plants also increased in 2014. “It was our biggest year yet in terms of new AD plants,” says Matt Hindle, policy manager at the Anaerobic Digestion and Biogas Association (ADBA). “There were about 100 new plants in 2014.” He expects 2015 to be quieter, with around 60 new plants, due to a reduction in AD feed-in tariff s. But there are now around 350 AD plants in the UK, generating 428MW of energy, with 500KW the most common size. Typical installation sites include farms, breweries, distilleries, factories, waste processing sites and water treatment plants.

Ongoing opportunities

These developments can create knock-on business for contractors too. Jo Whitehouse, business development AD plants. CWE has worked on 16 plants to date, spread across the UK, from Scotland to Kent and Wales.

CHP technologies may also off er commercial opportunities, but contractors must remember there is a mechanical element to these systems, alongside the electrical installation, warns Mike Heff ord, head of renewable technologies at heating specialist Remeha Commercial. Remeha’s products are used in domestic installations, as well schools and small hospitals. In future more electrical contractors may also be installing and maintaining energy storage technologies. Lithium ion batteries can be installed alongside domestic PV installations, to capture power not needed immediately for later use.

There will be many opportunities in renewables for contractors with MCS accreditation, says Dimplex’s Campbell. “The initial outlay and ongoing costs of registration are more than outweighed by the earning potential in a marketplace teeming with opportunity,” he concludes.

Case study: SCL Electrical

SCL Electrical is a family business originally founded by Alan Swatton in 1981. Today it is run by his son Richard, in partnership with co-owner and commercial director Stephen Lamplough.

The Northampton-based company also employs three other permanent engineers, alongside apprentices, sub-contractors and back offi ce staff . It also has a couple of members of staff based in Saudi Arabia, serving a growing client base there.

SCL invested in solar PV training when the opportunities fi rst became apparent. “Most customers were in the domestic market and we did a lot of installations in 2011-12 when the tariff s were high,” recalls Richard. “More recently we’ve moved into the commercial side.” One recent project was a 143KW installation, with 600 panels on multiple roofs for Rock UK, an Outward Bound Trust centre.

“It’s probably about 50 per cent of what we do now and growing month by month,” says Richard. “We always considered ourselves to be electrical contractors fi rst and foremost. We sold a lot of PV on the back of the fact that we would be around whatever happened with the tariff s. People like that.”

The company has also picked up work maintaining panels and PV equipment originally installed by other companies, some of which have since ceased trading. SCL also works as a sub-contractor for electrical contractors that do not work with PV, as well as with a company that specialises in wind turbine installation but does not work with PV. “It gives us another revenue stream and sets us apart from a lot of other contractors,” says Richard.

> Mitsubishi Ecobuild heat pumps

manager at Cosgriff Whitehouse Electrical (CWE) in Wolverhampton, says around 40 per cent of the company’s business is now accounted for by installing, testing and maintaining power, control and communication cables and other plant equipment at

‘The initial outlay and ongoing costs of registration are more than outweighed by the earning potential’