iles Hanglin savills.com

Transcription

1 ommunicating the Real Value of Solar Assets arge-scale Solar UK 2015 iles Hanglin savills.com

2 OLAR ROOFTOP INVESTMENT 1 UK Energy Supply and the Issues 2 UK Property and the Solar Solutions? 3 The Investment Case 4 Effect on Valuation of Property 5 Insurance and Reducing the Risk of Investment 6 A Compelling Case?

3 . Where does the UK get its Energy from? RENEWABLES 15% NUCLEAR 20% COAL 36% NATURAL GAS 27%

4 he Energy Issues in the UK... ecurity of Supply

5 he Driver for Investment GW of Capacity = 4.14 million acres of solar park or 165,000 million sq feet

6 . Over 165,000,000,000 sq ft of UK Commercial Rooftop Best of these Property Types for Ease of Installation? PPING CENTRES OFFICES LEISURE Landlord/Owner controlled roof space No need for FRI lease issues and tenant negotiations Offset own electricity supply for common parts etc Best IRRs and Returns on Investment!!

7 ext Best of these Property Types to Consider RETAIL INDUSTRIAL DISTRIBUTION Landlord/Tenant FRI leases negotiations and legal documents Sale of electricity to tenant occupier at discounted rate (PPA) Excellent IRRs and Returns on Investment still possible

8 . The Investment Case: - Understanding the Value of your Commercial Roof Tops

9 he Investment Case in the Midlands: 50kW Example Project = 20,000 sq ft of solar panels Roof Areas and Returns Electricity Produced (kwh) at a light yield of 828 kw/m2/pa 250kW system 207,000 Proposed Capex, incl. all fees & grid contingency 282,500 Estimated 1 st year net revenue 29,475 Estimated return on investment 75% on site consumption at 7.5p PPA with RPI Export to Grid Only estimated return WORST CASE at 4.85p (RPI) 10.83% 8.61% VALUATION at various yields 589, ,500 5% - 9%

10 . Effect on Property Valuation? wo Questions To Ask... 1: How will a rooftop solar PV installation impact the value of the underlying property asset? Firstly, there is no substantive reason for discount on property assets where solar has been installed once the below safe-guards are put in place (Alan Plumb and Mark White, Savills Valuation Team) Legal Building Survey Planning Insurance

11 . Addition to Property Valuation? 2: How will the income from a rooftop solar PV installation be valued? ity Property Valuation Teams: Range of Yields from 7-9% historically... - Now more confidence to use 5-6% yields, BUT valuation depends on: 20 year Feed in Tariff (FiT) Export to Grid as default for Electricity Sales Bonus for long term PPA agreed with Tenant Occupier If solar PV systems are installed using the safe-guards detailed above the result will be an increase in asset value. How much the asset increases in value by will be subject to the yield applied to the solar income.

12 Solar Energy 5. Solar Rooftop Insurance Overview Whole project cover in a joint named policy bought by the Landlord to include: 1. Business Interruption: Compensation of Tariff plus inability of Tenant/End User to receive power and cost of importing replacement supply 2. Latent defects Policy: 10 year post completion cover to protect against defects from solar installation

13 . A Compelling Case? - Lessons Learned so far & Key Areas to Address enant Interest oof Condition rid lanning Practical Financial Legal

14 ey Areas to Address Tenant Interest Roof Condition Grid Practical Legal Sublease Power Purchase (PPA) Planning EPC Contract O&M Agreement Financial

15 ey Areas to Address Tenant Interest Roof Condition Grid Planning Practical Legal Sublease Power Purchase (PPA) EPC Contract O&M Agreement Financial Price for Power 7-13% IRR Value of Building.?

16 ECC s Role in the Future of UK Rooftop Solar ECENT SUCCESSES Planning Process 50 kw historically now 1 MW threshold for planning application (80,000 sq ft panels) BUT still requires a formal notification to the Council Transferring of Systems (Portability) 5 years into system life Suitable equivalent property

17 ummary of Investment Case and Added Benefits Excellent returns on investment from solar PV Addition to value of property asset Use of unused rooftop asset within commercial property portfolio DECC Support ther Benefits? Complements 2015 ESOS reviews and will improve EPCs for 2018? Opportunity for reduced occupation costs for tenants? Returns or valuation increases may help pay for property repairs, making them cost neutral if done alongside solar PV installation? Tick in sustainability box for those occupiers or investors bound by corporate strategies and CSR? Future Rating of property likely to be linked to energy efficiency?

18 uestions? Giles Hanglin Head of Rooftop Solar Savills Energy +44 (0) (0)