Santander Eyes U.K. Solar-Roof Investment Despite Subsidy Cutsby
Banco Santander SA is considering investing in the U.K.’s rooftop solar power market, despite deep cuts to feed-in tariff subsidies coming into effect next week.
“The bank is very interested in the U.K. distributed generation market” and is trying to understand how best to finance the emerging industry, Alejandro Ciruelos, Santander’s managing director and head of project finance for the U.K., said in an interview in London.
The U.K. government will cut solar feed-in tariffs for new projects by as much as 64 percent from 8 February and cap new installations at 1.2 gigawatts from 2016 through March 2019 in a bid to keep a lid on renewable energy subsidies, which it says are a burden on consumers.
The U.K. solar market is an attractive proposition because homeowners also receive an export tariff that pays them for electricity generated by the panels but not used, Ciruelos said.
“The approach to due diligence in the generation market has to be different to how we finance large projects,” he said. “We have to find the right financing solution to back it up in a way that is efficient to those companies seeking to raise capital.”
European companies, such as Solarcentury and Lightsource Renewable Energy Ltd., have so far failed to emulate the success of their U.S. competitors in bringing the rooftop solar boom to the U.K. U.S. companies such as SolarCity Corp. have successfully attracted third-party financing for aggregating thousands of panels.
The model has been a success in the U.S. because of net metering, which credits homeowners that distribute power to the grid even if they do not use it, said Ciruelos.
“There’s quite a bit of talk at the moment about actual net metering being allowing in substitution for the export tariff element,” he said, noting recent comments made by former U.K Energy Minister Greg Barker and reported by Solar Power Portal. “If that happens I think there could be good momentum for solar PV despite recent changes in legislation.”