The Federation representing Roofing contractors in the UK has lent its support to the We Support Solar campaign. The National Federation of Roofing Contractors (NFRC), along with a number of other key members of the industry have joined the campaign to assert the notion of a feed-in tariff which if implemented properly will be a powerful way of kick starting solar investment in the UK.

The feed-in tariff, currently in the consultancy stage with the government, if introduced would offer long-term contracts with fixed rates for electricity produced by small scale installations. In other countries such as Spain and Germany it has proved to be a successful way of enticing investment by offering reliable yields over a long period of time. In this way, the feed-in tariff would also help create a number of jobs and also lead to the growth of the green energy manufacturing sector.

Since Gordon Brown’s statements regarding the ‘Green new deal’ in which he expressed his ideas to help the economy through the development of a low carbon economy, there has been an even greater focus on the real viability of solar, particularly if helped by government legislation. Many members of the industry have therefore been keen to bring to the fore the necessity of a strong feed-in tariff offering rates which will make solar investment a healthy, viable alternative to fossil fuels.

NFRC are fully aware of the potential impact of photovoltaic technology (PV) on both roofing, and construction in general as more and more private and public buildings are built with solar panels and PV tiles.

“The NFRC fully support the need for a robust feed-in tariff to encourage the uptake of solar in the UK. The time has come for roofs to be active parts of a building to help meet the national CO2 targets, to provide a viable solution to meet challenging future building regulations, and to support a generation of new jobs for roofers who are eager to become involved in the emerging green economy. A strong FIT for solar will help tackle the triple challenge of credit, energy and climate,” commented Ray Horwood Chief Executive of NFRC.

According to a Solarbuzz market report, solar investment in the Czech Republic increased 17 fold since 2007 due to the strong feed-in tariff there. Last year 50.8 megawatts of solar plant were installed in the Czech Republic compared to just 3 megawatts in 2007 representing a huge increase in solar investment. The Czech solar market, although still small compared to the European renewable giants Germany and Spain, has grown exponentially since the introduction of a feed-in tariff in 2005.

The Czech feed-in tariff has been extremely successful at attracting investment as it pays the highest rate for renewable electricity of any other European tariff. Currently set at 12.79Koruny per unit of energy fed-in to the grid (44p), the rate makes solar investment a very viable option for investors looking to diversify their portfolios by moving towards green shares. In the light of the recent economic downturn and the drawing in of purse strings in most sectors, solar offers investors a yield on their investment protected by government legislation. The Prague government has set itself the target of reducing its carbon emissions by producing 8 per cent of its energy by renewable means by 2010 and will therefore look to protect the solar industry within its borders.

While the Spanish solar market is still 48 times bigger than that of the Czech Republic, the Spanish sector has experienced a slowing due to the reduction of the rate of its feed-in tariff when the 500 megawatt cap was reached bring the rate paid down from 0.42 euros to 0.32 euros. This fall in the feed-in tariff rate was reflected by a marked reduction in Spanish solar plant and provides a warning to governments looking to sustain a boom over a long period. Jenny Chase of New Energy Finance commented that,

“I know some developers that were in Spain are now in business school because the market’s over, and some have moved to the Czech Republic”.

The Spanish example of the shrinkage after the initial 2007 boom will provide a warning to governments looking to implement their own feed-in tariffs in the near future. Certainly, the Department of Energy and Climate Change (DECC) will implement the feed-in tariff in the UK by the end of 2010 and are currently undergoing consultancy as to how to finance the tariff. Industry insiders have petitioned the government demanding at least a 40p/unit rate for electricity fed-in to the grid over a long term period of around 20 years. The Czech government have been extremely successful thus far and will continue to use their tariff system to attract investment in solar.

Fund manager Pascal Schuler of Swisscanto, the Swiss banking joint venture has asserted his belief that renewable stock will offer the best return for investors in the post financial crisis climate, certainly when compared against fossil fuel investments. Speaking specifically about the Swisscanto Fund Green Invest Equity, Schuler commented that portfolios based on traditional fossil fuel energy such as natural gas, coal and petro-chemicals would prove to be unsustainable within the next 20 years.

Schuler believes that the combination of fossil fuel degradation along with the global move towards renewable energy in light of international carbon reduction treaties will give green stocks a sustainability which will be robust against market fluctuations.

“Water, solar and wind energy are areas where we invest in the long-term, as there is an over-average growth potential when financing kicks off again. Banks will prefer them when they start lending,” commented Schuler who sees green stocks as a healthy, high yield option.

Investors will be attracted to renewable sectors in countries where there is comprehensive legislation in place to protect investment and ensure a long-term viability for capital injected into new, renewable technology. Many governments have introduced feed-in tariffs as a way of attracting investment by offering long-term contracts to renewable investors with a fixed, premium rate guaranteed for any megawatts fed-in to the national grid. Certainly in Germany, this particular system of tariffs has been an extremely successful way of offsetting the cost of generating electricity by renewable means rather than by traditional fossil fuel methods. Many inside the industry will be hoping for a similar system to be introduced in the UK in 2010 but until then Germany has proved to be a hotbed of green technology especially in regards to photovoltaic (PV) technology.

The Swisscanto green fund, worth around $205 million has already taken an interest in German renewable stock and is looking to build its portfolio in the German PV sector. The fund has plans to invest in German renewable sector companies SolarWorld, SMA and Wacker Chemie and will certainly look elsewhere once other countries have strong legislation in place to kick-start the renewable energy industry.

Schuler finished by saying, “We will continue to invest in this segment but focus on companies which have a strong balance sheet and are able to survive this crisis.”

As a solution to the global economic crisis, Gordon Brown has called for an international ‘Green New Deal’ in order to spark investment in new technologies and create jobs in the emerging renewable sector. In reference to F.D. Roosevelt’s economic plan to revitalise the US economy during the Great Depression the Prime Minister explained that he believes striving to evolve the UK in to a low carbon economy will create jobs while at the same time help the government to meet its climate change targets.

The British government has already set the target of an 80 per cent reduction in greenhouse gases by 2050 and have taken some measures to instigate this reduction. Overseeing this gradual change towards a low carbon economy will be the Secretary of State for the Department for Energy and Climate Change, Ed Milliband. The minister has already advocated government investment in renewable energy technology and research and was a key figure behind last November’s Energy Act which set out the main provisions for government funding for green energy and paved the way for the implementation of a feed-in tariff in 2010.

Despite these changes, some environmental lobbies and members of the renewable industry have criticized the government for not providing enough funding for green projects and not setting out a concrete breakdown of the feed-in tariff which will be necessary to attract investment as it has done for example in Germany. Spokesman for Friends for the Earth, Andy Atkins summed up the frustration in certain circles by commenting,

“We need urgent and decisive action, not more token gestures and hot air.”

Gordon Brown is confident that the green sector will provide some relief to the recession in the jobs that it creates, not just in the UK but globally and he was keen to make this point last week at a summit in London. The prime minister produced the results of an independent report which states that the renewable energy sector will generate around 400,000 new jobs within the next 8 years meaning that by 2017 1.3 million people will be involved in the renewable sector in the UK.

During his historic visit to Washington last week for his meeting with US President Barack Obama, Brown stated that it was imperative both for the economy and the environment that changes are made to the way governments approach renewable funding stating,

“We know that the more we are able to co-ordinate these measures internationally, the more confidence and certainty we will build and the more investment we will be able to bring forward.  That’s why I want to create a global ‘green new deal’ that will pave the way for a low-carbon recovery and to help us build tomorrow’s green economy today.”

Key to this shift towards a low carbon economy is the feed-in tariff which has already proved extremely successful where it has been implemented elsewhere. Members of the industry have already expressed the need for a tariff which is more than a token gesture and is able to attract investors through coherent, long term, viable contracts. Some have suggested that a rate of 50p per unit of kWh energy fed-in to the grid by renewable systems under 5 Megawatts would be sufficient to help Britain catch up with nations such as Germany where feed-in tariffs are now well established. The feed-in tariff rate is crucial as it will offset the cost of producing energy by renewable means by offering investors long term contracts with fixed rates for their megawatts production.

Andy Atkins of Friends of the Earth, regarding the summit and the need for government action on tariffs and project funding added,

“Today’s summit is an encouraging development, but ministers must grasp the scale of the challenge we face. We need urgent and decisive action, not more token gestures and hot air”.