February 3, 2009

Britain Looks To Public Housing To Help Solar Firms

The ailing solar power industry is getting help from a British scheme to halve the cost of installing solar panels on schools and social housing, Reuters reported.

Such a scheme offers a hope for future employment opportunities as the economic slowdown threatens many renewable energy projects.

"We were set up four years ago to do the predominantly social housing. We're not seeing any tail-off," said John Fitzpatrick, site manager for the public housing arm of developers Croudace Homes.

The Office for National Statistics shows that new orders in the construction industry fell 14 percent in the 12 months to November 2008. Orders for private homes fell by one-third, while those for public housing were steady in the third quarter of 2008.

Business and political leaders have been pitting bailout funds against climate change to boost green growth. The Obama administration has pledged to spend $150 billion on clean energy to create 5 million jobs.

The UK will spend about $114.5 million through 2010 subsidizing low-carbon energy generation on buildings, much of that on public housing. This has offset declining interest from residential homeowners.

The privately owned Solar Century said it costs up to $21,460 to install solar panels for private homeowners just to meet half their electricity needs, not including grants. This adds up to a significant cost in a recession, especially when mortgage lenders are keeping a watchful eye on falling house prices.

Solar Century says the cost will fall 10 percent in the second half of 2009.

Derry Newman, Solar Century's chief executive, said installations on new private homes are down at least 25-30 percent, year on year.

"So we've redirected our efforts. We do a lot of work with schools, public buildings and government agencies. That's obviously a sector where revenue isn't falling, if anything government is trying to push forward purchasing."

In an effort to stimulate the economy, Britain plans to bring forward to this year and next spending of 3 billion pounds on houses and roads. Prime Minister Gordon Brown has voiced support for measures to ease social housing construction to house 4.5 million people.

President Barack Obama plans to spend tens of billions to cut carbon emissions from federal facilities under an economic stimulus plan that may cost up to $900 billion.

The plan is currently being rushed through the U.S. Congress and is expected to include about $15 billion in grants and loan guarantees for local renewable energy generation and efficiency updates.

Entrepreneur Jigar Shah, founder of America's biggest operator of solar panels, SunEdison, a company he recently left to pursue fresh start-ups, doesn't believe it will be enough to keep every renewable energy developer busy.

The stimulus plans may also include tens of billions of dollars of clean energy tax breaks. The solar sector has the advantage of being zero-carbon emitting, but needs public subsidy because it is still more costly than rivals such as coal-fired power plants.

The UK's system of supplying grants for residential home energy generation, known as microgeneration, differs from that in Germany, the world leader in solar power generation whose model the UK aims to emulate.

Prices for "green" electricity are guaranteed for 20 years in Germany, encouraging homeowners to feed their solar-generated electricity back into the national grid using a so-called feed-in tariff.

German residential installations were proceeding "flat out" at the end of last year, reinforcing the success of the model, according to Citigroup analysts. Britain is to launch a feed-in tariff for microgeneration from 2010.

However, private home installations are part of a bigger, global solar power market that includes large, centralized clusters of panels in solar parks.

Since banks are so reluctant to lend to such projects, developers say they are trying to "educate" alternative investors, including any cash-rich private equity firms.

Emergency stimulus funds may help bridge a difficult 2009 until countries trying to meet pledges to fight climate change revive renewable energy. But for some, a sweeping transformation of the building sector is still far off.

The European Photovoltaic Industry Association said European solar power capacity nearly doubled in 2008 to about 9 gigwatts (GW), enough to power 2-3 million homes.

But that is still only about 1 percent of European power generating capacity.


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