Issue link: https://maltatoday.uberflip.com/i/744537
maltatoday, SUNDAY, 30 OCTOBER 2016 24 W hat is a solar farm? The MEPA draft policy document of 2014 describes it as a "a sizeable commercial installation with a footprint larger than 1,000m2, not usually related to residential development, for the purpose of renewable energy generation by means of photovoltaic technology." When such a solar farm is community-based, it means that capital needed to install and maintain this large array of panels is pooled voluntarily by the public. In turn households or companies who do not have roof space available to install and benefit from government grants on photovoltaics can still gain from this scheme. By paying a sum upfront to cover installation and maintenance costs through the years, such investors will be entitled to credits on their own residential or commercial premises' electricity bills. Generally such a scheme will award these benefits to investors for a finite period of time, anywhere from five to 30 years, after which panels would need to be replaced (or re-priced) and a fresh round of funding can restart the scheme. The disadvantages When compared to other power generation options, solar energy is considered inconsistent due to weather variability and the fact that generation is limited to daylight time only. It also requires a large surface area to compete with the power output of other energy plants. The footprint size is of a significant concern on such a small island. These types of shortfalls of solar power can be significantly alleviated through technological advancements in battery storage. Specific disadvantages of solar farms, when compared to individual PV installations include transmission efficiency and spatial diversification. The former relates to the fact that residential PV panels can generate power which can be used immediately within the household. This avoids losses through transmission lines which are estimated between 7-11% (Deodhar, 2011). The lack of spatial diversification refers to the centralized risks of shocks to electricity supply from a single site which may suffer from cloudiness and other elements. As with many other significant industrial projects, it will be opposed by different stakeholders. The Not-In-My- Back-Yard (NIMBY) syndrome can stem from the aesthetics of a solar farm. Some people feel that solar energy fields are unattractive and can take away from the natural look of their environment. What can make it a win-win project? The government would not be required to allocate funding for the most expensive part of the project: panel installation and maintenance. Such costs would be voluntarily sponsored by members of the public. The government still needs to devote time in administering the project, such as site selection, and tender specification and review. Another advantage for the government is the utilization of resources lying idle, such as bare land or any state building rooftops, by harnessing free solar power. The same advantage can be applicable to the private sector where, for example, disused quarries can be turned to commercial solar farms. The concept of economies of scale and scope dominate the benefits of this type of business model: • By optimizing the site selection of the project where panels can receive maximum sun exposure without any adjacent buildings imposing shade. • By buying solar panels in bulk (through the tender process) the cost per unit is driven down. • By investigating the kind of professional installation required for the panels to be angled and tilted optimally (even in real time) during the day. • By minimizing the cost of the professional maintenance required throughout the lifetime of the project through a tender process. • The physical PV panels require very regular and specialist cleaning to keep them converting solar radiation at their optimal advertised rate. Again, such maintenance can be incorporated in the tender terms. • Storage of excess electricity in a battery system (as it becomes feasible in the future) can be more efficiently linked to such a centralized farm. This would allow storage of extra capacity to be used during peak times. Consumers sometimes are overwhelmed with the bewildering array of options and suppliers available, as is the case when shopping for PVs. Marketing technical specifications such as KW, feed-in-tariffs and return on investments may alienate some potential customers. Having the state and not a commercial company taking care of your environmental and economic priorities and providing a tender approach involving expert engineers can bring much needed peace of mind to many. This project also makes good for the unequal benefit distribution of current government grants on PVs. Current subsidies are relatively regressive as they assist relatively richer households who own their own roof. Lower income families living in apartments have no viable option to source their energy in a cleaner manner while also benefiting from government subsidy. Another advantage for the government and society is of course the reduced dependency on non-renewable energy and the associated polluting effects. Consequently Malta will also be in a better position to reach its EU-set environmental targets due in 2020. What we know so far The solar farm mooted at tal-Fiddien in Rabat will have an output of 1 megawatt, with the feed-in tariff tagged at 15c per unit for the first six years, and the rest of the 20-year period tagged at 10c5/unit for a total of 350 households. Electricity consumption is measured in kilo watt hours (kWh). One kWh is the amount of electrical energy consumed when switching on electrical equipment rated at 1,000 watts (the average microwave) for one hour. In your bill, one kilo watt hour is represented as one unit. The KW rating of the solar farm investment options relate to the maximum power that can be generated by "your" solar panels. This maximum rating can only be reached for around five hours each day, depending on sunshine. As a hypothetical example, if you opt for the 1KW option and you run a microwave for five hours a day and everything else is switched off, your electricity bill will be 0. Understanding pricing Opting for the minimum investment possible, 1KW at a cost of €1,495, roughly this investment option can yield around 5 units per day throughout the year. Electricity units are priced at 15c for the first six years, therefore this feed-in-tariff credits your utility bill by €1,600 over six years (15c x 5 units per day x 365 days in a year x 6 years). Therefore the payback period is approximately six years and you profit for the remaining 14 years (albeit at a lower feed-in-tariff). Over the full 20-year period, the initial outlay in year one of €1,495 is offset by a total return of €4,325 by the end of the 20th year. For those more economically inclined, when the costs and benefits are netted and discounted at 3% per year, the net present value approaches €2,000. The minimum 1KW option will hardly cover a two-person household, that is, your electricity bill will not be zero by the credit-offsetting of solar generation. However as can be seen above, it still offers an attractive return. By investing in the more expensive higher-KW options, one can expect progressively lower bills and even better returns on investment. International scene We would be not inventing the wheel. This type of energy project has been implemented in many countries using different business models. The first one was established in 1982 in California, USA with a capacity of 1MW. Nowadays such schemes are available all over the world with capacities over 800MW in Germany, China and USA, which are the market leaders. However much of the solar parks operating around the world today are run by private utility companies, unlike this case in Malta. This may indicate, that the government wants to pioneer the solar energy market but ultimately encourage the private sector to take up this market. Due to its very nature, it is very difficult for solar to be relied upon as a sole energy source. However solar technology has reached a point where it has become a very attractive complementary energy source both on a small residential basis and on large scale community projects. Going forward, the predictable steady progress in battery technology can only make such solar power generation more effective. A solar farm administered by the government can be easily funded by environmentally conscious and financially diligent citizens on a voluntary basis. In turn such investors will enjoy lower electricity bills even without rooftops. High levels of efficiency are guaranteed given the great potential for economies of scale of such community solar farms. Opinion The solar farm – a no brainer? Making housing affordable for those who need it @MaltaGov Neville Zammit THIS IS A PAID ADVERT