Idea to lease solar panels on contract is catching on with HDB but cost, hot property market could be dampeners
But before proponents can declare it as a possible answer to Singapore’s constant bid to diversify its energy mix – the concept has already proven to be popular in other parts of the world, including southern California, in the United States – experts had some reservations about whether the concept would take off here, even as the cost of solar panels head south.
They cited the “short-termism” that is prevalent among private property owners. The fact that most Singaporeans live in public flats also meant that the Government’s buy-in will be critical. Moreover, the cost savings might not be meaningful for private properties, given the economies of scale.
Deputy CEO of the Solar Energy Research Institute of Singapore Armin Aberle pointed out: “With solar leasing, you need a roof space for the next 20 years. It’s a long term investment and, in Singapore, very few people own their own roof space and have such long-term thinking, because of the hot property market … they buy and sell very quickly.”
Dr Arberle however, pointed out that the concept may be the way to go for new HDB developments.
The first solar-leasing project was awarded in September last year: The HDB awarded a tender to Sunseap Enterprises, a solar system developer, to lease two mega-watt-peak solar PV systems for 45 HDB residential blocks in Punggol. The installations were completed last month, and the system will provide power for common area facilities such as corridor lights and lifts.
Sunseap Business Development Manager Brandon Lee said his company is planning to offer the solar leasing service to private residences “as early as next year”.
“For private residential buildings, the system size is smaller, so the unit cost will also be higher,” he said.
Sunseap’s gameplan is to use its profits from companies and other organisations to subsidise the costs for individual households, said Mr Lee.
PV World is the other company here that provides solar leasing services. Its Managing Director Loh Lean Chooi said households living in private residences may save “only about S$20 or S$30 a month” by leasing solar panels.
So far, a handful of entities have signed up for the leasing services, including Raffles Institution (RI). The school signed a lease last month for Sunseap to install 625 panels on two of the school’s blocks. The panels will generate up to 175,000 kilowatt hours of energy annually to power lighting in classrooms, lecture theatres, air conditioning units and fans. Neither Sunseap or RI would reveal the commercial terms of the lease.
According to Mr Lee, the upfront cost of a system similar to RI’s would cost S$700,000. On lease terms, organisations need to fork out only 20 per cent of that, he added.
Sakae Holdings was one of the first companies to sign a lease. It is installing some 1,400 solar panels on the roof of its headquarters in Upper Paya Lebar. Its CEO Douglas Foo said solar leasing enabled the company to invest in solar energy, despite lacking the necessary expertise.
Keppel DHCS has also leased solar panels for its district cooling system plant at Changi Business Park. The cost savings are estimated to be about 10 per cent per annum, said a the company’s spokesperson.
While Mr Lee was optimistic that more companies will come on board once the concept becomes better known, Mr Loh felt that the Government could do more to encourage companies to take up the service.
“The Government only provides subsidies to buildings if they are able to achieve the Building and Construction Authority’s Green Mark status … Also, in other places such as Europe and Australia, subsidies are provided for the 20-year lease period,” he said.
Singapore’s rapid urban renewal rate also means that building owners are afraid to commit to a 20-year lease – the minimum tenure that is needed for the solar system developers to make a profit – for the solar panels. “This is another major problem we face here,” said Mr Loh.