BUSINESS ANALYSIS OF SOLAR

SYSTEM INSTALLATION ON
RESIDENTIAL HOMES

Name (Student Number)

Abel Kimbinyi (M00459875)

Peri Pedro Adukpo-Egi, (M00441129)
Bharath Kumar Munusamy (M00508732)
Alahmadi, Abdulaziz Madani S (M00517944)
Rifat Abdul Rahiman, (M00514416)
Mohammed, Adil Pasha (M00517769)
Britto Anand Vincent (M00514817)

October 2015

A thesis submitted in partial fulfilment of the requirements for an MSc

in Engineering Management/Engineering Project Management.

Supervisor:

PDE 4241 – MSc Thesis Dr Michael Censlive

 Plagiarism Declaration

MSc Thesis ii
 Plagiarism Receipt

MSc Thesis iii

 Similarity Record

MSc Thesis iv
 Turnitin plagiarism summary

Student Individual Work and Plagiarism Summary

Student Student Name Sections written Word Percent

Number Count Of Plagiarism
individual For
Students Individual
Work Students
Work
Introduction
Abel Kimbinyi
M00459875 Financial 6,700 <1%
Conclusion
Peri Pedro Risk Analysis
M00441129 6,913 <1%
Adukpo-Egi
M00508732 Logistics and
Bharath Kumar
SCM 5,814 <1%
Munusamy

Rifat Abdul Market Analysis

00514416 6,439 <1%
Rahiman
Alahmadi, Installation
M00517944 Abdulaziz Description 6,499 <1%
Madani S
Britto Anand Product and
M00514817 6,074 <1%
Vincent System
Mohammed, Adil Organisation
M00517769 4,679 <1%
Pasha Structure

MSc Thesis v
 Abstract

This report examines the viability of installing solar panels on residential rooftops
within the United Kingdom (UK). The scope encompasses a project design that is
financially profitable, technically feasible and attractive for investors; one that is
obviously environmental friendly.

In recent years there has been a drive to find sustainable renewable energy not only
in the UK, but all over the world. Most of the electricity generated currently in the UK
comes from burning fossil fuels. This process leaves behind a large carbon footprint
which is associated with climate change and other pollutions. The UK government
has been in the forefront in pioneering initiatives of various green power generation
schemes such as wind farms, solar systems, ocean currents and many others
(Energy saving trust, 2014).

While there is more than one type of power generation using the sun, we shall be
using Photovoltaic (PV); utilising the sun light. Simple yet effective concepts have
been used to maximise profits. We have capitalised on dropping prices of solar
panels from China (premium quality) and the government green energy incentives
that are currently in place. The unnecessary need for a middleman has been
completely eliminated in this business model thus saving us large sums of money.
The storage of operational and installation equipment in rented shipping containers
is yet another economical innovative approach to cost cutting.

This report outlines how technology can be used effectively to achieve a required
outcome cheaply and efficiently. Tried and tested measures have been put in place
to protect the business interests. With solar installation companies mushrooming, we
differentiate ourselves by (1) giving our customers a foretaste of the beauty of our
solar deal for one year, (2) using the top of the range solar panels, (3) giving them
ownership after one year at half the market price, and (4) an optional maintenance
contract for five years.

Word Count: 40,760

MSc Thesis vi
 Acknowledgement

We would like to first of all thank the invisible God who comforted us and
encouraged us to keep pressing on in the face of discouragements; without his help
all help would have amounted to nothing.

We wish to thank Dr Michael Censlive for his supervision and support during the
whole project.

Finally, we would like to the thank Prof Mehmet Karamanoglu and Dr Paula
Bernaschina for their support.

MSc Thesis vii

 List of Figures
Figure ‎1-1: Annual income Vs Expenditure ................................................................ 2
Figure ‎1-2: Annual Gross Profit .................................................................................. 3
Figure ‎3-1: Lean Organisational Structure ................................................................. 8
Figure ‎3-2: GSS Organisational Levels .................................................................... 10
Figure ‎3-3: Office to rent .......................................................................................... 15
Figure ‎3-4: Office Location comparison.................................................................... 16
Figure ‎3-5: Office Setup Layout ............................................................................... 17
Figure ‎3-6: CCTV ..................................................................................................... 24
Figure ‎3-7: Van with lift............................................................................................. 26
Figure ‎4-1: Monocrystalline Panel ............................................................................ 30
Figure ‎4-2: Polycrystalline Panel .............................................................................. 31
Figure ‎4-3: Thin Film Panel ...................................................................................... 32
Figure ‎4-4: Roof Anchors ......................................................................................... 35
Figure ‎4-5: Mounting Frames ................................................................................... 36
Figure ‎4-6: Mid Clamp and End Clamp .................................................................... 37
Figure ‎4-7: String Inverter System ........................................................................... 39
Figure ‎4-8: Microinverters System............................................................................ 40
Figure ‎4-9: DC Isolator ............................................................................................. 42
Figure ‎4-10: AC Isolator ........................................................................................... 43
Figure ‎4-11: Stand Alone system ............................................................................. 45
Figure ‎4-12: Grid-Tie System ................................................................................... 46
Figure ‎4-13: Electricity Consumption........................................................................ 48
Figure ‎4-14: String Inverter ...................................................................................... 49
Figure ‎4-15: Single Series String ............................................................................. 50
Figure ‎4-16: Multiple Series String ........................................................................... 51
Figure ‎4-17: Domestic Solar System ........................................................................ 55
Figure ‎4-18: Annual Solar Radiation at Different Directions ..................................... 56
Figure ‎4-19: Annual Solar Radiation at Different Angles ......................................... 57
Figure ‎4-20: Maximum wind speed in uk .................................................................. 58
Figure ‎5-1: Solar Pitch.............................................................................................. 63
Figure ‎5-2: Fitting the Anchors ................................................................................. 78
Figure ‎5-3: Installing the panels ............................................................................... 79
Figure ‎5-4: Placing the inverter ................................................................................ 80
Figure ‎6-1: Solar Distribution in the United Kingdom Annually ................................. 85
Figure ‎6-2: Direct Normal Irradiance in the United Kingdom (Annually) ................... 86
Figure ‎6-3: National Household and Population Projections for 6 years from 2015 . 87
Figure ‎6-4: Number of Roofs without Solar PV Installations..................................... 89
Figure ‎6-5: Mean cost of Solar PV installation in the UK (April 2014 - March 2015) 91
Figure ‎6-6: FIT Payment made from 1 April 2015 - 30 September 2015 .................. 93
Figure ‎6-7: UK Carbon Dioxide targets compared to other Greenhouse gas targets 95
Figure ‎6-8: Lowest Price comparison between Office (with storage) in different ...... 98

MSc Thesis viii

Figure ‎6-9: Top 10 sub regions in South East England with roofs without Solar PV
............................................................................................................................... 101
Figure ‎6-10: Number of Roofs without Solar PV in Kent ........................................ 103
Figure ‎7-1: Comparison of Key Suppliers............................................................... 109
Figure ‎7-2: 8x40 Container..................................................................................... 111
Figure ‎7-3: Carriage and Insurance Paid To (CIP) ................................................. 113
Figure ‎7-4 Direct costs comparison between China and UK .................................. 116
Figure ‎7-5 Direct Costs .......................................................................................... 117
Figure 8-‎8-1: Risk Management Process ............................................................... 119
Figure ‎8-2: Risk Assessment Matrix ....................................................................... 122
Figure ‎9-1: Annual Projected Profit and Loss ......................................................... 141
Figure ‎9-2: Cumulative Profit and Loss over 5 Years ............................................. 142
Figure ‎9-3: Annualised Costs ................................................................................. 143
Figure ‎10-1:: High Yield Gross Compound Interest ................................................ 145
Figure ‎10-2: Comparison of Interest ....................................................................... 146
Figure E-3:Electrical installation certificate ............................................................. 196

MSc Thesis ix
List of Tables
Table ‎3-1: Office Location Cost Comparison............................................................ 16
Table ‎3-2: Office Setup Costs .................................................................................. 18
Table ‎3-3: Employee Costs ...................................................................................... 19
Table ‎3-4: Shift Rota ................................................................................................ 19
Table ‎3-5: Team Schedule ....................................................................................... 20
Table ‎3-6: Recurring Expenses ................................................................................ 21
Table ‎3-7: Non-recurring Expenses.......................................................................... 22
Table ‎3-8: Electricity Comparison ............................................................................ 23
Table ‎3-9: Transport Vehicles .................................................................................. 27
Table ‎4-1: Comparison between Monocrystalline, Polycrystalline and Thin Film .... 34
Table ‎4-2: Comparison between Grid-Tie Inverters ................................................. 41
Table ‎4-3: Wire Gauage Size ................................................................................... 44
Table ‎4-4: System Size and Annual Output ............................................................. 47
Table ‎4-5: Inverter Ratings ................................................................................. 52
Table ‎4-6: Voltage correction factor ......................................................................... 53
Table ‎5-1: Solar Pathfinder ...................................................................................... 61
Table ‎5-2: Cost of PPE............................................................................................. 82
Table ‎6-1: Assessment of Market Areas Number of Roofs with Solar PV Installations
and without Solar PV Installations ............................................................................ 89
Table ‎6-2: Electricity consumed annually for different regions of the United Kingdom
(MWh) ...................................................................................................................... 90
Table ‎6-3: FIT rates (July 2015 - December 2015) .................................................. 92
Table ‎6-4: FIT Payment made between 1 April 2015 - 30 September 2015............ 93
Table ‎6-5: Degression Rates for FIT in the United Kingdom .................................... 96
Table ‎6-6: Busiest Ports of the United Kingdom ....................................................... 97
Table ‎6-7: Top 10 sub regions in South East England with Roofs without Solar PV
Installation .............................................................................................................. 100
Table ‎6-8: Number of Roofs without Solar PV in Kent ........................................... 102
Table ‎6-9: Sub Regions with highest expected Increase of residential Solar PV
installations ............................................................................................................ 104
Table ‎7-1 Price Comparison of CIF and CIP .......................................................... 114
Table ‎7-2: Direct Cost Comparison of China and UK ............................................. 115
Table 8-‎8-1: Risk Control Measures ....................................................................... 125
Table ‎8-2: Risk Contingency .................................................................................. 133
Table ‎8-3: Risk Budget ........................................................................................... 133
Table ‎9-1: Payback Period ..................................................................................... 139
Table ‎9-2: Present Value Table .............................................................................. 140
Table ‎10-1: Assets in Year 5 .................................................................................. 144

MSc Thesis x
List of Abbreviations
AD Annual Demand

BOP Business‎Owner’s‎Policy‎

CEN Confiscation, Expropriation and Nationalisation

CFR Cost and Freight

Ch Holding cost per Unit per Year

CIF Cost Insurance and Freight

CIP Carriage and Insurance Paid To

CP Carriage Paid To

Cp Ordering Cost

DA- Delivered At Terminal

DAP Delivered At Place

DDP Delivered Duty Paid

DNI Direct Normal Irradiance

EOQ Economic Order Quantity

EPC Energy Performance Certificate

EXW Ex Works

FAS Free Alongside Ship

FCA Free Carrier

FCL Full Container Load

FIT Feed-In Tariff

FOB Free On Board

GW Giga Watts

MSc Thesis xi
KW Kilo Watts

KWh Kilo Watt Hour

LCL Less Than a Container Load

MCS Microgeneration Certification Scheme

MW Mega Watts

PPE Personal Protective Equipment

PV Photovoltaic

UA Unitary Authority

UK United Kingdom

W Watt

MSc Thesis xii

Table of Contents
Plagiarism Declaration ................................................................................................ii
Plagiarism Receipt ..................................................................................................... iii
Similarity Record ........................................................................................................iv
Turnitin plagiarism summary ...................................................................................... v
Abstract ......................................................................................................................vi
Acknowledgement ..................................................................................................... vii
List of Figures ........................................................................................................... viii
List of Tables .............................................................................................................. x
List of Abbreviations ...................................................................................................xi
Table of Contents ..................................................................................................... xiii
Chapter 1 Introduction ............................................................................................. 1
1.1 Business Overview ........................................................................................ 1
1.2 Financial Overview ........................................................................................ 2
1.3 Profit and Loss .............................................................................................. 3
1.4 Vision Statement ........................................................................................... 3
1.5 Business Objectives ...................................................................................... 4
1.6 Short term ..................................................................................................... 4
1.7 Medium term ................................................................................................. 4
1.8 Long Term ..................................................................................................... 4
1.9 Opportunities and Threats ............................................................................. 4
1.10 Exit Strategy .............................................................................................. 5
Chapter 2 Business Summary ................................................................................. 6
2.2 Business Details............................................................................................ 6
2.3 Key People .................................................................................................... 6
Chapter 3 Organisation Structure ............................................................................ 8
3.2 Worker Expertise........................................................................................... 9
3.3 Departmentalisation ...................................................................................... 9
3.4 Span of Control ........................................................................................... 10
3.5 Centralisation and decentralisation ............................................................. 11
3.6 Recruitment ................................................................................................. 13
3.7 Office Space................................................................................................ 15
3.8 Location ...................................................................................................... 15

MSc Thesis xiii

 3.9 Office Setup Costs ...................................................................................... 18
3.10 Employee Costs ....................................................................................... 18
3.11 Recurring Expenses................................................................................. 21
3.12 Non-Recurring Expenses ......................................................................... 22
3.13 Office Security.......................................................................................... 23
3.14 Advertising and Promotion ....................................................................... 24
Chapter 4 Product and Systems Description ......................................................... 29
4.2 Circuit Overview .......................................................................................... 29
4.3 Product Description ..................................................................................... 29
4.3.1 PV Solar Panels .............................................................................................................. 29
4.3.2 Roof Anchors: ................................................................................................................ 35
4.3.3 DC-AC Inverters: ............................................................................................................ 37
4.3.4 Disconnect Switches: .................................................................................................... 42
4.3.5 Cables and Wires:.......................................................................................................... 43
4.4 System Design: ........................................................................................... 45
4.4.1 PV Solar System: ........................................................................................................... 45
4.4.2 Size of the System: ........................................................................................................ 47
4.4.3 Inverter and String Sizing .............................................................................................. 49
4.4.4 Schematic Diagram of a Domestic Solar System........................................................... 55
4.5 Key Considerations: .................................................................................... 56
4.5.1 Orientation: ................................................................................................................... 56
4.5.2 Roof Angle: .................................................................................................................... 57
4.5.3 Wind Load: .................................................................................................................... 58
Chapter 5 Installation Description.......................................................................... 60
5.2 Site Survey .................................................................................................. 60
5.2.1 Solar Pathfinder ............................................................................................................ 61
5.2.2 Solar Panel Orientation ................................................................................................. 62
5.2.3 Roof Pitch ...................................................................................................................... 63
5.2.4 Temperature ................................................................................................................. 63
5.2.5 Shade............................................................................................................................. 63
5.2.6 Front Surface Soiling ..................................................................................................... 63
5.3 Planning Permission ................................................................................... 64
5.3.1 Microgeneration Certification Scheme (MCS) .............................................................. 64
5.3.2 Renewable Energy Consumer Code (RECC) .................................................................. 66

MSc Thesis xiv

 5.3.3 Electrical Installation Certificate (EIC) ........................................................................... 67
5.3.4 British Photovoltaic Association (BPVA) ....................................................................... 67
5.3.5 Legislation ..................................................................................................................... 68
5.3.6 Standard and Regulation:.............................................................................................. 68
5.4 Contract ...................................................................................................... 68
5.4.1 Conditionality ................................................................................................................ 69
5.4.2 Supplier Obligations for Installation ............................................................................. 69
5.4.3 Title and Risk ................................................................................................................. 69
5.4.4 Customer Obligations ................................................................................................... 70
5.4.5 Consents........................................................................................................................ 71
5.4.6 Electricity Power Output ............................................................................................... 71
5.4.7 Charges and Fees .......................................................................................................... 71
5.4.8 Insurance ....................................................................................................................... 72
5.4.9 Term and Termination .................................................................................................. 73
5.4.10 Consequences of Termination ...................................................................................... 73
5.4.11 Entire Agreement .......................................................................................................... 74
5.4.12 No Partnership or Agency ............................................................................................. 74
5.4.13 Variations and Waivers ................................................................................................. 74
5.4.14 Assignment/Subcontracting .......................................................................................... 74
5.4.15 Costs .............................................................................................................................. 75
5.4.16 Severability.................................................................................................................... 75
5.4.17 Notices .......................................................................................................................... 75
5.4.18 Governing Law .............................................................................................................. 76
5.4.19 Maintenance ................................................................................................................. 76
5.5 Scaffolding .................................................................................................. 77
5.6 Installation Process ..................................................................................... 77
5.6.1 Safety ............................................................................................................................ 77
5.6.2 Fitting the Roof Anchors ............................................................................................... 78
5.6.3 Attaching the Frames .................................................................................................... 78
5.6.4 Installing the Panels ...................................................................................................... 79
5.6.5 Wiring the Panels .......................................................................................................... 79
5.6.6 Wiring the Panels to the Inverter: ................................................................................ 79
5.6.7 Inside the Home: ........................................................................................................... 80
5.6.8 Commissioning the System ........................................................................................... 80

MSc Thesis xv
 5.6.9 Time Taken .................................................................................................................... 81
5.6.10 Testing the System ........................................................................................................ 81
5.6.11 Personal Protective Equipment .................................................................................... 81
5.6.12 Signs and Labels ............................................................................................................ 82
Chapter 6 Market Analysis .................................................................................... 83
6.2 Distribution of Solar energy in the United Kingdom ..................................... 84
6.3 Geographical Distribution ............................................................................ 87
6.3.1 Roofs ............................................................................................................................. 88
6.4 Electricity consumption and Expenses ........................................................ 90
6.4.1 Cost of Solar PV system Installation.............................................................................. 90
6.5 Feed-in-Tariff and Carbon Dioxide savings ................................................. 92
6.5.1 Carbon Dioxide Emissions ............................................................................................. 94
6.5.2 Degression Rate ............................................................................................................ 95
6.6 Business Locations ..................................................................................... 96
6.6.1 Sea Port ......................................................................................................................... 96
6.6.2 Access ............................................................................................................................ 97
6.6.3 Office and Storage......................................................................................................... 97
6.6.4 Workforce ..................................................................................................................... 98
6.7 Competition ................................................................................................. 98
6.8 Information on Local Authorities of South East of England ......................... 99
6.9 Market Forecast ........................................................................................ 103
6.10 Market Risks .......................................................................................... 105
Chapter 7 Logistics and Supply Chain Management........................................... 106
7.2 Logistics .................................................................................................... 106
7.3 Economic Order Quantity (EOQ)............................................................... 106
7.3.1 Annual Demand .......................................................................................................... 107
7.3.2 Cost Per Order or Ordering Cost ................................................................................. 107
7.3.3 Holding Cost per Unit per Year ................................................................................... 107
7.4 Key Suppliers ............................................................................................ 108
7.5 Suntek supplier ......................................................................................... 109
7.6 Transportation ........................................................................................... 110
7.6.1 Containers ................................................................................................................... 111
7.6.2 Full Container Load (FCL) ............................................................................................ 112
7.6.3 Less than a Container Load (LCL) ................................................................................ 112

MSc Thesis xvi

 7.7 INCOTERMS............................................................................................. 112
7.7.1 Carriage and Insurance Paid To (CIP) .......................................................................... 112
7.7.2 Cost Comparison of CIF and CIP .................................................................................. 114
7.8 Direct Costs............................................................................................... 114
Chapter 8 Risks and Risk Management .............................................................. 118
8.2 Risk Management ..................................................................................... 118
8.2.1 Risk Identification........................................................................................................ 119
8.2.2 Risk Analysis ................................................................................................................ 121
8.2.3 Risk Responses ............................................................................................................ 123
8.2.4 Risk Monitoring ........................................................................................................... 131
8.3 Risk Budget and Contingency ................................................................... 132
8.4 Competition Risks ..................................................................................... 133
8.4.1 Competition Analysis .................................................................................................. 134
8.4.2 Controlling Risks Posed by Competitors ..................................................................... 136
8.4.3 Project Failure due to Competitors Advancement ..................................................... 137
Chapter 9 Financial Analysis ............................................................................... 138
9.2 Return on Investment ................................................................................ 138
9.3 Payback Period ......................................................................................... 138
9.4 Present Value Analysis ............................................................................. 140
9.5 Projected Profit and Loss .......................................................................... 141
9.6 Cumulative Annual Revenues and Cost of Sales ...................................... 142
9.7 Annualised Revenue and Cost of Sales .................................................... 143
Chapter 10 Conclusion ...................................................................................... 144
10.2 Compound Interest of Investing in a high yield (5%) .............................. 145
Bibliography ........................................................................................................... 147
Appendices ............................................................................................................ 169
Appendix A Introduction .................................................................................. 169
A-1 Management Gantt Chart .......................................................................... 169
A-2 Pay Roll ..................................................................................................... 170
A-3 Cost of standard Installation ...................................................................... 171
Appendix B Business Summary ...................................................................... 172
B-1 Organisation Structure .............................................................................. 172
Appendix C Organisation Structure ................................................................. 173

MSc Thesis xvii

 C-1 Company Logo .......................................................................................... 173
C-2 Website Domain ........................................................................................ 174
C-3 Fiat Doblo Cargo Quotation ...................................................................... 174
C-4 Fiat Doblo Cargo Quotation ...................................................................... 175
C-5 Citroen Berlingo Enterprise Van Quotation ............................................... 175
C-6 Berlingo Diesel Quotation ......................................................................... 176
C-7 Office Printer ............................................................................................. 176
C-8 Executive Chair ......................................................................................... 177
C-9 Executive Desk ......................................................................................... 177
C-10 Office Chair ............................................................................................ 178
C-11 Sofa ....................................................................................................... 179
C-12 Reception Table ..................................................................................... 179
Appendix D Product and Systems Descriptions .............................................. 180
D-1 Types of Solar Cell .................................................................................... 180
D-2 Colour codes and applications for Insulation ............................................. 184
D-3 Technical data for Solar panels and String Inverter .................................. 186
D-4 Direction and Orientation .......................................................................... 188
D-5 Wind Loading ............................................................................................ 189
Appendix E Service and Installation Processes .............................................. 192
E-1 Definitions and Interpretations................................................................... 192
E-2 Certificates ................................................................................................ 196
E-3 Installation Symbols and Signs ................................................................. 197
E-4 Technical Information ................................................................................ 198
E-5 MCS Certification ...................................................................................... 199
E-6 RECCC ..................................................................................................... 200
E-7 Planning Permission ................................................................................. 202
E-8 Site Survey Form ...................................................................................... 203
Appendix F Market Analysis ............................................................................ 204
F-1 Top Solar PV Markets ............................................................................... 204
F-2 Analysis on Sunshine and Other climate factors ....................................... 205
F-3 Climate Stations ........................................................................................ 211
F-4 Population and Households ...................................................................... 212
F-5 Analysis on Roofs ..................................................................................... 214

MSc Thesis xviii

 F-6 Analysis on Electricity generated .............................................................. 219
F-7 Analysis on Feed-in-Tariff (FIT) scheme ................................................... 224
F-8 Breakdown of Carbon Dioxide released into the atmosphere ................... 229
F-9 Analysis on Ports, Offices and Workforce ................................................. 230
F-10 Distribution of Roofs with and without Solar PV installations in the South
East of England .................................................................................................. 234
F-11 Forecast on new Solar PV installations done by 2016. .......................... 239
Appendix G Logistics and Supply Chain Management .................................... 242
G-1 Comparison of Key Suppliers .................................................................... 242
G-2 Suntek Profile ............................................................................................ 246
G-3 Rent for Containers ................................................................................... 247
G-4 Specification of Container ......................................................................... 248
G-5 Incoterms .................................................................................................. 249
G-6 Direct Cost Comparisons .......................................................................... 252
Appendix H Risks and Risk Management ....................................................... 258
H-1 Risk Identification ...................................................................................... 258
H-2 Risk Register ............................................................................................. 259
H-3 Quantifying the Risks Costs ...................................................................... 261
H-4 Justifications for Risk Evaluation Figures .................................................. 261
Appendix I Financial Reports ......................................................................... 268
I-1 Year 1 Trading Accounts ........................................................................... 268
I-2 Year 2 Trading Accounts ........................................................................... 269
I-3 Year 3 Trading Accounts ........................................................................... 270
I-4 Year 4 Trading Accounts ........................................................................... 271
I-5 Year 5 Trading Accounts ........................................................................... 272
I-6 Compound Interest at 5% High Yield Bond ............................................... 273

MSc Thesis xix

Chapter 1 Introduction

[Abel Kimbinyi]

1.1 Business Overview

The UK government has been driving the introduction of energy supplies that are
secure, clean, affordable and alleviate the global climate change (Energy saving
trust, 2014). Although in excess of 400 registered solar installation companies (Free
Index, 2015), the average installation cost is still deemed exorbitant by many home
owners. The recent drop in the prices of energy has further made the time for Return
on Investment (ROI) even longer.

Solar Photovoltaic (PV) systems are systems that take in solar energy and convert it
to electric energy. The electricity produced is Direct Current (DC) which then flows
through the cables to the Inverter. The inverter in turn converts the Direct Current
into Alternating Current (AC) which is used for most home appliances. The unit of
energy consumed is measured in Kilowatt-hour (kWh).

Our company, Global Solar Systems (GSS), has come up with a cutting edge
business model that presents an attraction for solar installations on residential
homes. We use modern installation techniques, lean installation teams, generated
tariff sharing scheme and bulk buying, making us the most preferred installer.

We will order directly from the suppliers, cutting off the middle man, thereby passing
the benefits to the customers. Customers will have first-hand experience of the
benefits of solar energy for a year before owning the installation as their own.

By focusing on developing high quality Monocrystalline solar panels (considered the

high efficiency and expensive quality), we hope to be the market leaders of
affordable solar installations. We will offer customers an option of 5 years
maintenance contract to give them a peace of mind.

Customers who sign up for an installation will participate in a generated power

sharing scheme enjoying up to 50% discount on their power usage for a year. This
does not only give them savings but also gives them an opportunity to experience
the benefits of solar power.

MSc Thesis 1
1.2 Financial Overview
We have forecasted to attain Gross revenues of £513.29 in the first year;
£5,616,513.29 in the consequent years as shown in figure 1-1. This will have an
initial planned investment of £3,696,082.17. We envisage that there will be an annual
investment of £3,696,082.17 keeping a total of 104 installations every month.

Expenditure Vs Income
£8,000,000

£6,000,000

£4,000,000

£2,000,000
Amount

Expenditure
Income
£-
Net Income
1 2 3 4 5

£(2,000,000)

£(4,000,000)

£(6,000,000)
Year

Figure ‎1-1: Annual income Vs Expenditure

MSc Thesis 2
1.3 Profit and Loss
There will be a gross loss in the first year but this is expected as part of the business
plan. This is clearly shown in figure 1-2 below. The benefit of hooking customers to
our business far outweighs this loss.

Gross Profit
£3,000,000.00

£2,000,000.00

£1,000,000.00

£0.00
Year 1 Year 2 Year 3 Year 4 Year 5
Gross Profit
(£1,000,000.00)

(£2,000,000.00)

(£3,000,000.00)

(£4,000,000.00)

Figure ‎1-2: Annual Gross Profit

1.4 Vision Statement

We trust that by providing superior installations while pricing our product
comparatively, we can offer our customers an alternative to the current suppliers; a
superior product at competitive price.

By bulk buying, sharing the generation proceeds for a year and eliminating the
middle man we are confident we can outprice our competitors.

As we team up with green activists campaigning for clean energy that is matched by
a great sales deal, we want to be reckoned as the best solar installation team.

MSc Thesis 3
1.5 Business Objectives
Our business objectives are to maintain a balance of profitability that is matched by
quality products and services. We are under no illusion that the solar market is highly
competitive and so we intend to differentiate our brand name and reclaim the solar
market.

1.6 Short term

We aim to establish a strong installations base and team in the first year, installing
104 homes in a month. This will be equal to installing 14,976 solar panels per year.

1.7 Medium term

 Having established the business in year 1, we hope to continue to grow
towards profitability and mastery of the industry.
 Improve on lessons learnt from year 1
 Look to being nominated best installer of the year
 Establish our maintenance support to our customers

1.8 Long Term

 We look to year 3 as the year of making a real profit and the beginning of
many success years.
 We look to expanding further in the country and working to penetrating the
European market.
 Establish marketing for solar spares.

1.9 Opportunities and Threats

Opportunities

 Our solar business model is new and unique on the market

 More houses are being built in the target area creating potential market
 The government incentives for green energy will encourage home owners to
take up installations

Threats

 There are approximately 400 registered solar installation companies operating

in England and Wales.
 Product differentiation will be a challenge in the initial phases of the business
 We need to make sure we deliver on superior quality and affordable price to
our customers.

MSc Thesis 4
1.10 Exit Strategy

Best case
Every effort has been undertaken to make this business successful including plans
to expand to Europe in the long term.

In unlikely event that our customers (clients) default on paying for the installation
after one year, we will sell it to our Financing partners. The financing partners will
pay us the total amount and pass the costs to our customer as a loan on their terms
and conditions.

Worst Case
If on the other hand, our Financing partners are unable to reach an agreement to sell
the solar panel installation to our customers this will not result into a total failure. This
will only result in reduced profitability. The customer will lose the discount they
enjoyed in the first year and pay premium tariffs for the power they use from that
time onwards until they buy the ownership of the installation. In this way, there
cannot be a total loss arising from an installation.

MSc Thesis 5
Chapter 2 Business Summary

[Abel Kimbinyi]

2.2 Business Details

Global Solar Systems (GSS) will be based within Kent. With an already established
website, customers can express their interest in solar installation by completing a
form so that we can get back to them.

The business model will involve engaging potential customers using various
promotion media.

2.3 Key People

General Manager

Skills

The General Manager will be a time served senior manager with over five years of
experience in managing installation business. He/she will have the skill of managing
people in a fast moving environment where time is critical. He/she will have the
ability to work well under pressure with high skills to effectively manage tight
deadlines.

He/she will need to have passion for clean energy and have demonstrable skills of
solar energy ambassador.

Responsibilities

Apart from managing the company, the General Manger will actively monitor the
solar installation market to find areas where we need to improve. He /she will gather
customer feedback to ensure that their experience is positive. He/she will actively
seek to exhaust the local market before expanding outwards so as to keep the
transport and logistics cost low in the initial stages.

Installations Manager

Skills

MSc Thesis 6
The installations Manager will be a person having a proven record in both
managerial and technical skills to sufficiently support the General Manager. He/she
will have good understanding of the technical side of solar energy and scaffolding.
He will be a competent Surveyor and have detailed knowledge of installations.

Responsibilities

The Installations Manager will carry out all the surveying and client contracts with the
help of the office Manager.

Advisors

The bank will offer business advice and financial direction. Sage (2015) have gladly
offered to give advice on starting up a business. Finally, the Kent County Council
(2015) will provide advice on growing a business for free.

Designinc

Type: Marketing and Advertising

Design Incorporated (UK) Ltd

Centurion House
London Road
Staines
Middlesex
TW18 4AX
Tel: +44 (0)1784 410380
E: info@designinc.co.uk

MSc Thesis 7
Chapter 3 Organisation Structure

[Mohammed, Adil Pasha]

Global Solar Systems (GSS) will be a lean organisation structure as seen from figure
3-1. This section addresses the organisation structure, recruitment, personnel
management, office resource, local logistics and operations. Sales promotions are
covered in this section unlike in the marketing section.

Lean Organisational Structure

Global Solar Systems

General
Manager

Installation Office Accounts

Manager Manager Manager

Team Leader

Skilled Tech A Skilled Tech B Skilled Tech C Unskilled A Unskilled B Unskilled C

X2 X2 X2 X4 X4 X4

Figure ‎3-1: Lean Organisational Structure

Our organisation is composed of group of employees who work together to achieve

the common goal. According to Robbins, et al (2013) an organisational structure
defines how tasks in the organisation are categorised, grouped, organised and
managed. Our organisational structure defines how all activities such as task
allocation, coordination and supervision will be directed towards the achievement
of organisational aims and objectives (Senior & Fleming, 2009). Robbins, et.al
(2011) highlights six elements that are considered to be very important for an

MSc Thesis 8
organisational structure. These are work expertise, department, centralisation, chain
of command, span of control and decentralisation.

3.2 Worker Expertise

This is the first element that is very important for a successful organisational
structure. Employees will be managed according to the organisational structure. An
organisational structure is defined as the degree to which the works are categorised
and assigned to different employees in the organisation. All our employees will be
highly skilled and will come with vast experience. As these employees will be
repeating the jobs on a daily basis they will soon become experts in it (Daft, 2009).

In Global Solar Systems, individual team members will be assigned specific jobs,
given a particular task to perform and provided with specific roles and
responsibilities.

3.3 Departmentalisation

Once the works are categorised and assigned to individual workers in an

organisation, it is important to group these jobs based on the category so that it can
be organised and coordinated. The basis of grouping these jobs is referred as
departmentalisation (Mukherjee, 2009).

In Global Solar Systems, the groups are categorised based on the department and
what they will be doing. Installation teams will fall under Technical department and
will be managed by the Installations manager. Then there will be other departments
such as Accounts managed by the Accounts manager; and administration managed
by the Office manager.

MSc Thesis 9
3.4 Span of Control

This is defined as the number of team members or subordinates that an individual

manager can direct and control effectively and efficiently (Aquinas, 2009).

Level 1
General
Manager

Level 2
Installation Manager
Office Manager
Account Manager

Level 3
Team Leader

Level 4
Skiled and Unskilled Techniciians

Figure ‎3-2: GSS Organisational Levels

In GSS, there are four levels in the organisation; starting with the General Manager
and ending with the Skilled and Unskilled technicians who will be installing the solar
panels.

At the top level of the organisation is the General Manager who controls and
manages three different managers namely: Office manager, Installation manager
and Accounts manager. These three managers constitute the second level of the
organisation. The Installation manager is the only manager in level two who has a
subordinate, Team leader, and the other managers have no one to give commands
or instructions.

MSc Thesis 10
The Installation Team leader forms the third level of the organisation who manages
18 technicians. These technicians are classified as skilled and unskilled technicians.

Chain of Command

This is the line of authority that starts from the top level of organisation going down to
the very bottom of the organisational hierarchy (Borrington & Stimpson, 2014).

There are two major concepts that are related with the chain of command namely
authority and unity of command (Combe, 2014). Authority is defined as the rights in a
managerial position that provides the power to give orders to their subordinates.
Unity of command is the concept of having one manager for the subordinates to
report, this avoids confusion and problems associated in the employees (McShane,
et al., 2011) particularly in technical organisations like GSS.

In GSS, the control is mainly with the General Manager who resides in the top most
of the organisational hierarchy. Installation manager, Office manager and Account
manager directly report to the general manager. The team leader reports directly to
the installation manager. A total of 18 technicians (6 skilled and 12 unskilled) will be
reporting to the team leader.

3.5 Centralisation and decentralisation

The term‎“centralisation”‎is‎defined‎as‎the‎degree‎to‎which‎the‎power‎of‎decision‎
making and control is resided at a particular point in the company (Robbins, et al.,
2013). This concept is related to the formal authority and the power provided to an
individual’s‎position. Basically in the centralisation type of organisation, the power
and authority is provided to the top level management. The top level management
makes the important decisions for the organisation where they take little or no inputs
from the lower level of the organisation. This type of organisation is referred as
“centralisation”.‎In‎the‎decentralisation type of organisation, there is a very large
amount of input provided by the low level employees and plays an important role in
the‎organisation’s‎decision‎making‎process (Mukherjee, 2009).

GSS follows the centralization where the major power resides with the General
Managers who makes the decisions for the organisations.

Roles and Responsibilities

MSc Thesis 11
According to Davis, et al. (2007) well defined roles and responsibilities allow the
employees to acquire responsibility and accountability towards their specific tasks
and objectives. It is very important for the management to define the roles and
responsibilities of the team members in order to ensure employees work effectively
and efficiently. Clear job description and responsibilities for every individual
employee in the organisation allows the employees to be focused, prioritise their
work and also gives them ownership over specific tasks (Strande, et al., 2014). In
this project, there are several employees involved with responsibility of performing
different type of jobs that includes office management, direct marketing, installation,
accounts management, digital marketing and promotions. The following are the
different responsibilities associated with our solar panel business.

Employee Roles and Responsibilities

General Manager

General Manager manages the overall operations of the organisation. The General
Manager is responsible for the day to day activities of the company and ensures
smooth functioning of all the operations associated with the company.

Office Manager

The office manager plays an important role as a website developer and Search
Engine Optimisation (SEO) strategist. He is responsible for developing website
which is mobile and web friendly. He is responsible for finalising the keywords and
bringing‎the‎“website”‎to‎rank‎in‎the‎first‎page‎of‎the‎search‎engines‎that‎includes‎but‎
not limited to Google, Yahoo, Bing, and others search tools.

Account Manager

The account manager is responsible for managing the accounts of the customers,
business income and expenses on the daily basis and also submitting monthly
reports to the management.

Installation Manager

The installation manager manages the team leader of the installation team. He is
responsible for all the installations at client places. Installation manager co-ordinate

MSc Thesis 12
and analyses the reports of the team leader; conducts critical review and report the
same to the general manager. He may also be required to conduct site surveys on
behalf of the organisation.

Installation Team Leader

The team leader leads the installation technicians who are skilled and unskilled.
Team leader is also responsible for conducting the surveys at customer sites for
solar panel installations. Team leader reports directly to the installation manager.

Installation Technicians (Skilled)

These skilled installation technicians are 6 in number. They tend to manage the
installations along with the assistants on a daily basis. It is their responsibility to
ensure the installations are properly completed and tested at the customer premises.
Skilled Installation Technicians are also responsible for conducting the survey on the
customer’s‎site‎for‎the‎installation‎of‎solar‎panels.

Installation Team (Unskilled)

These assistants carry out most of the installations and hands on workers. They
help the skilled technicians and also can work independently with minimal
supervision. The responsibility of these unskilled installation team members is to
carry out all installations at the customer premises.

3.6 Recruitment
According to (Balasubramanian, 2014) recruitment is an important process that plays
a vital role in the success of the organisation. In the recruitment process, it is
inevitable to analyse the job description so as to recruit the appropriate manpower.
The success of recruitment lies in the effective understanding of the job and
matching it with the skills of the candidate (Yeung, 2010). All the businesses require
efficient‎manpower‎and‎human‎resources‎to‎achieve‎the‎organisation’s‎strategic‎
goals and objectives. It is inevitable for the organisation to recruit the right candidate
for the right position in the company. Lange (2011) addresses the various
recruitment practices for small and medium enterprises. For a start up like Global
Solar Systems, employing the right persons might be the most important part of the

MSc Thesis 13
venture. An effective recruitment and selection process reduces turnover. These
processes match up the right person with the right job skills.

Many employers believe that recruitment can be too costly and time-consuming. A
recent study by the British Chambers of Commerce and Maximus UK highlighted
that 43% of businesses spend around £2,000 for hiring an employee. In our case, we
are going to use the strategies that are free; but effective in terms of finding the right
candidate for the position.

GSS Recruitment Strategy

GSS will only recruit already skilled workers so as to eliminate the cost of training
staff. Global Solar Systems will utilise the online and social media as the recruitment
tool to find the right candidates for the right positions in the organisation.

1. Use Company Website – Careers

Using the company website, job titles with a clear job description will be made and
be published in the career section. This website will be promoted on all the major
social media website that includes Facebook, LinkedIn and other related websites.

2. Dedicated Social Media Pages

Our company will have dedicated social media pages like FB page, LinkedIn
Company Profile and also in twitter. Using these dedicated company pages, we will
publish the recruitment information and post the job information.

3. Free online job advertisements

There are several websites that allow posting the job advertisements for free. These
websites will be identified and utilised for the job adverts.

MSc Thesis 14
3.7 Office Space

Figure ‎3-3: Office to rent

Our location has got a perfect office suit that was refurbished and has got 5 different
rooms meeting our requirements (Rightmove, 2015). The key features in this office
space are:

 Suspended ceiling
 Central heating
 Carpets

The most important facility with this office space is the 10 parking spaces. These
spacious parking will be used for housing containers which will be used as
warehouse for our solar panels and accessories.

3.8 Location
This office space will be located in Lydden on the Canterbury Road.
This space has a car parking facility which could easily be used for 6 cars
(Rightmove, 2015). The table below highlights the two offices spaces that are found
on Rightmove website addressing their space in square feet and the cost per annum.

MSc Thesis 15
Table ‎3-1: Office Location Cost Comparison

Office Address Space Cost per Annum

Pharos House Honeywood
Road, Whitfield, Dover, 3,385 sq. ft. £30,000
CT16 3EH
CANTERBURY ROAD,
1299 sq. ft. £12,500
Lydden, CT15

From the above table, it is clear that although the first office location option in Dover
is 3,385 sq. ft. is more expensive per sq. ft. compared to the second office location in
Lydden.

35,000
30,000
30,000

25,000

20,000
Space
15,000 12,500 Cost per Annum
10,000

5,000 3,385
1299
0
Dover Lydden

Figure ‎3-4: Office Location comparison

For our company, the 1299 sq. ft. office space will be sufficient. As the facility has
space for six cars, the parking will be used for housing the containers.

MSc Thesis 16
Office Resources and Equipment

In this office plan, we address the various costs involved in setting up the office such
as: office rent, furniture and materials required to setup the office.

Figure ‎3-5: Office Setup Layout

Office Materials required:

There following office materials required for the interior and make the office
habitable:

 1 Reception Table
 1 Small Sofa
 1 Small Table
 Cafeteria Table Set (1 Table 4 Chairs)
 5 Workstations
 4 Office Desks
 6 Office Chairs
 1 Executive Desk
 1 Executive Chair

MSc Thesis 17
3.9 Office Setup Costs
Table 3-2 below shows the cost of setting up our office.

Table ‎3-2: Office Setup Costs

Items Quantity Cost/Item Total Cost (in Pounds)

CPU & Monitor 5 £189 £945

Office Desk 4 £60 £240

Cafeteria (Table & 1 £245 £245

Chairs)
Reception Table 1 £90 £90

Reception Sofa 1 £95 £95

GM Executive Table 1 £250 £250

Office Chairs 6 £35 £210

GM Executive Chair 1 £145 £145

Printer 1 £21.45 £21

£2,241
Total Cost

3.10 Employee Costs

GSS will pay competitive salaries in order to maintain the staff. The pay reflects the
skills and experience required for each role. The general manager in collaboration
with the Accounts manager will plan for these costs to ensure efficient labour force is
maintained.

MSc Thesis 18
Table ‎3-3: Employee Costs

Nos Staff Status Monthly Pay Annual Pay

1 General Manager Permanent £2,500.00 £30,000.00

1 Installation Manager Permanent £2,000.00 £24,000.00

1 Office Manager Permanent £1,800.00 £21,600.00

1 Accounts Manager Permanent £ 2,000.00 £24,000.00

1 Team Leader Permanent £1,850.00 £22,200.00

6 Skilled Labour Permanent £12,480.00 £149,760.00

12 Unskilled Labour Permanent £20,800.00 £249,600.00

Scaffolding £30/home £3,120.00 £37,440.00

Total Cost £ 46550 £ 558,600

Shift Rota
Table 3-4 below shows how the teams are assigned for the different days of the
shifts every week. Every team works for four days in a week on a rotational basis.

Table ‎3-4: Shift Rota

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

A1, A2 B1, B2 C1, C2 A1, A2 B1, B2 C1, C2 -
B1, B2 C1, C2 A1, A2 B1, B2 C1, C2 A1, A2 -

This table shows the working teams on a daily basis except Sundays when they
have a rest day. A total of 4 different teams On Monday, teams A1, A2, B1, B2 will
be working; on Tuesday, the team B1, B2, C1, C2 will be working; on Wednesday
the teams C1, C2, A1, A2 will be working; on Thursday the teams A1, A2, B1, B2

MSc Thesis 19
will be working; on Friday, B1, B2, C1, C2 will be working; and finally on Saturday
the teams C1, C2, A1, A2 will be working for the solar panel installation.

The table 3-5 below shows how many members are in each team and number of
working hours per member.

Table ‎3-5: Team Schedule

Teams A1,A2,B1,B2,C1,C2
Members in each team 3 (1 skilled, 2 unskilled)
Total members of Installation 18 (6 teams)
Total members working per day 12 (4 teams)
Time taken per 1 installation 36 hrs
(Total)
Time taken per 1 shift per member 12 hrs
Time each member works in 1 48 hrs (4 shifts)
week

There are 18 installation technicians in GSS; out of these, 6 are technically skilled
and 12 others are unskilled. From the above table, it is clear that 3 installation
members will constitute each team (A1, A2, B1, B2, C1, and C2). Out of 3
installations team members 1 will be skilled and 2 members will be unskilled. Even
though there are six teams of installation technicians, only four teams are utilised
every day for the purpose of payments. This ensures that teams are only paid for the
work done.

Website Domain

In recent years, the technological development and the boom in the internet has
provided a great opportunity for the businesses all over the world to promote their
brand over the internet. Small Medium Enterprises (SMEs) have a wide opportunity
to utilise the internet and market their products more effectively. Websites are one of
our one of our major marketing for this project.

Our Domain Name is: www.gsolars.co.uk

MSc Thesis 20
Our mobile friendly website is designed and developed in such a way that it attracts
new customers and provides a great opportunity for us to exploit the local market.
Search Engine Optimization (SEO) is the technique that ensures the ranking of
websites in Google and other major search engines for keywords and phrases of
website searches. A good SEO strategy will help us to achieve good ranking for our
business keywords searches. Google holds over 94% of search traffic in the UK.
SEO will therefore help us to‎get‎good‎traffic‎to‎our‎company’s‎website.

Some of the Keywords used for the SEO strategy are:

 Solar Panel installation

 Cheap and best Solar panel installations in Dover
 Best Solar Panel installations in UK
 Affordable solar panel installation

3.11 Recurring Expenses

A Recurring Cost is a regularly occurring cost or estimated cost which is documented
with one record and the following are our cost.

Table ‎3-6: Recurring Expenses

Recurring Expenses Cost/Month Cost/Year

Telephone and Internet £25 £300

Employee Costs £46550 £558,600

Maintenance £100 £1,200

Miscellaneous £75 £900

Vehicle Fuel Costs £100 £1,200

Total Expenses £46850 £562,200

In GSS, there are 4 major recurring expenses such as the telephone and internet
costs, employee costs, maintenance costs and miscellaneous costs. It is very
important to forecast the expenses that will be recurring on a monthly basis, as it

MSc Thesis 21
would provide an understanding about the money required to run the business
smoothly. From the above table, we can clearly see that employee costs constitute
the major expense in the organisation. Employee costs are £46,550 for a month and
it costs £558,600 for a year. The total expenses that will be recurring on a monthly
basis are £46,850 making it £562,200 per year.

3.12 Non-Recurring Expenses

A non-recurring item refers to an entry that appears on a company's financial
statements that is unlikely to happen again. It represents a one-
time expense involving an unpredictable event and is not part of a firm's normal, day-
to-day operations.

Table ‎3-7: Non-recurring Expenses

Non-Recurring Expenses Cost/Month Cost/Year

Advertising £150 £1,800

Emergency Costs
£100 £1,200

Website Domain £4.99

Website Hosting £2.99 £35.88

Total Non-Recurring Expenses £252.99 £3,040.87

The above table provides a clear idea about the non-recurring expenses associated
with GSS. These non-recurring expenses are the costs involved in advertising,
emergency costs, buying website domain, and the hosting costs involved.

Office Electricity

Electricity is an important component that is inevitable for any business operations.

GSS, being a solar panel Installation company, will be setting an example for others
to adopt the energy concept. We will install solar panels on our premises so as to
reduce the electricity bills. Installation Cost for a Solar Panel on our premises will
cost us £2,500.00

MSc Thesis 22
It can be clearly seen from the table below that over five years the cost of installation
is more economical. On average offices spend about £100.00 a month on electricity
which makes £600.00 over a year.

Table ‎3-8: Electricity Comparison

Electricity 1 Month 1 Year 5 Years

Electricity Cost £100.00 £1,200.00 £6,000.00
Solar Panel Cost One Time Installation: £2,500

The table above shows a clear advantage of using solar power on an office,
particularly one that only conducts business during the day. From the table we can
clearly see that it costs £100 per month through normal grid electricity supply. The
table also shows the total cost per year and over 5 year.

3.13 Office Security

Our equipment is kept in steel containers which must be kept secure all the times.
This equipment is very expensive and there is a potential threat associated with
keeping these solar it in the parking spaces. So it is very important to provide
adequate security to monitor and protect this valuable solar panel equipment.

To monitor and protect, GSS uses CCTV security system which is connected to the
Installation‎and‎Account‎manages’‎mobile‎systems.‎The‎model‎we‎use‎is‎simple‎and‎
yet every effective, costing only £175.98.

MSc Thesis 23
Figure ‎3-6: CCTV
Source: (do it yourself, 2015)

3.14 Advertising and Promotion

This is very much essential for the survival and success of an organisation. This is
an important part of the business strategy that allows the consumers to get attracted
towards the products and services (O’Guinn,‎et‎al.,‎2011). There are four important
elements associated with the promotions such as publicity, direct marketing, sales
promo, and personal selling. Marketing plays a vital role behind the success of a
business. It shows the way that a company adopts for positioning its products in the
market. There are two major advertisement strategies: above the line advertising and
below the line advertising. The former method utilises the mass media promotions
such as television advertisements, press, celebrity endorsements, and film
advertisements. The above the line advertising is very effective in attracting the
customers as it reaches out to lot of people. This advertisement is comparatively
expensive than the below line advertising. Using the below the line advertising, we
will utilise various methods such as direct email campaigns, trade shows, coupons,
referral programs and catalogues. This digital age has provided a great cutting edge
for the small businesses to grow their business (Springer, 2009).

MSc Thesis 24
Direct Mail Marketing

This is one of the most effective marketing methods where a professional mail will be
directly sent to the target audience. This direct mail will address the services,
features,‎and‎most‎importantly‎the‎“unique‎selling‎points”‎of‎our products and
services. While we plan to use this method in the long run, GSS however will
consider other options first.

Door-to-Door Marketing

This is a very prevalent below the line marketing methods where the trained
marketing executives and sales representatives will visit the customer premises and
explain about the product. In GSS, there will be direct executives who will sell the
products‎based‎on‎the‎customer’s‎interest‎that‎comes‎through‎cold‎calling‎or‎through‎
website leads. The leads generated through the website or internet will be contacted
over the phone and scheduled an appointment. The executives will meet the client
and explain the benefits of installing GSS solar panel systems on their premises.

Email Marketing

In recent years, email marketing has reached its peak as majority of the people
started using internet and viewing emails on a daily basis. There are several benefits
associated with email marketing when compared to direct marketing (Arnold, 2011).
A professional email has the ability to attract the target audience and helps to
promote and build the brand (Ceylan, 2008).

This is one of the important strategies that are used in GSS to target the local
audience with their attractive email templates. The databases of the customers will
be located through several means and a professionally made email template with
soft copies of company brochures and other information will be sent to the leads.
The email marketing allows the organisation to reach out to its target audience and
tends to build branding and image among them. The email campaigns are effective
when they are done periodically as it would allow the target customers get curious
about the products and services.

MSc Thesis 25
SEO Marketing

According to Charles & Usigbe (2013) SEO marketing strategies helps the
companies to promote their businesses in a very safest and cheapest way. SEO
marketing is considered to be one of the most effective marketing strategies in the
business world. Search Engine Optimisation allows the organisations to promote the
business over the internet by acquiring good ranking in the search engines (Ramos
& Cota, 2008).

For GSS, in terms of advertising and promotions, we will adopt below the line
advertising strategy where we concentrate mainly on utilising the digital media for
promotional activities. This starts with designing an interactive user friendly website
to showcase our products and services. Secondly SEO will be used to promote the
website with the intention of bring it on top of the search results. Social media
marketing will also be adopted where a Facebook pages will be created and all the
activities will be regularly updated.

Local Logistics and Operations

We will be using four Vans with ladder facilities to carry out the local logistics
operations. They will mainly operate between our offices and customer premises.
These specially equipped Vans will be loaded with the solar equipment at the office
premises and move out to the customer premises for installation. The vehicles with
will have automated lifts making installations quicker and efficient.

Figure ‎3-7: Van with lift

MSc Thesis 26
Table ‎3-9: Transport Vehicles

Name of the Vehicle Description Cost

Make: Citroen

Citroen Berlingo Model: Berlingo enterprise

Enterprise Van Diesel, £1,450

Mileage: 88,700
Condition: Well Maintained
Make Fiat
Model Doblo Cargo
Year 2008
Fiat Doblo Cargo diesel Mileage 95000
van Fuel type Diesel £1,995.00

Transmission Manual
Colour White
Engine size 1910

Make: Citroen
Model: Berlingo
Berlingo 1.9 diesel with Year: 2001
mot Fuel type Diesel £500

Transmission Manual
Colour White

Diesel

Fiat Doblo Cargo Colour: White

£850
Year: 2003
Transmission: Manual

GSS requires four vans for their installation team members to go the client premises
and install the solar panels at the roof top. The biggest advantage of these vans is
they are fitted with the powered lifts that are operated with a remote control. This
helps the installer to easily get to the roof top and while controlling the lift basket.

MSc Thesis 27
Table 4-2: Operational Fixed Assets

Items Quantity Cost/Item Total Cost (in Pounds)

Vans 4 Variable £4845

CPU & Monitor 5 £189 £945

Office Desk 4 £60 £240

Cafeteria (Table &

1 £245 £245
Chairs)
Reception Table 1 £90 £90

Reception Sofa 1 £95 £95

GM Executive Table 1 £250 £250

Office Chairs 6 £35 £210

GM Executive Chair 1 £145 £145

Printer 1 £21.45 £21

TOTAL COSTS £7086

The table 4-2 represents the costs involved for the operational fixed assets
associated with the organisation. The major fixed assets cost of GSS are the Vans
that are bought for the purpose of carrying the solar panels and other materials to
the installation sites. These vans will need to be kept in a good condition by having
regular maintenance. In event of a van breakdown, our insurance will give us
replacement vans according to the terms agreed

MSc Thesis 28
Chapter 4 Product and Systems Description

[Britto Anand Vincent]

Solar‎energy‎is‎obtained‎by‎the‎conversion‎of‎sun’s‎ray‎into‎electrical or thermal
(heat) energy by means of Photovoltaic (PV) solar panels or using concentrated
solar power. For the purpose of this project we concentrate only on solar conversion
for electricity. PV Solar panel is a panel which is designed with semiconducting
materials that manifest photovoltaic effect which take up sunlight as a source of
energy to produce electricity. We are harnessing this characteristic for this project to
produce electricity by installing PV solar panels on residential rooftops. While there
may be many products that can achieve this, only few of them are suitable for
residential purposes.

4.2 Circuit Overview

Solar panels are made of a combination of solar PV cells. When sunlight strike
silicon in solar PV cells, Direct Current (DC) electricity is created which flows from
these solar arrays (panels connected together) through the cables. This current is
then processed through various devices to produce useful power for home use.

4.3 Product Description

The basic components required for the installation of solar panels are as follows:

 Solar panels
 Mounting‎equipment’s‎such‎as‎roof‎anchor,‎mounting‎frames‎and‎clamps.
 DC –AC Inverters
 DC Disconnect switches.
 AC Disconnect switches.
 Cables and wires.
 Generation Meter

4.3.1 PV Solar Panels

The photovoltaic system makes use of solar panels made up of solar cells to
produce usable power. A solar cell is a semiconductor material which converts
sunlight into electricity (www.chemistryexplained.com, 2015). Conversion is
accomplished by absorbing light and ionizing crystal atoms, thereby creating free,
negatively charged electrons and positively charged ions. The positively charged
MSc Thesis 29
ions are called holes and their movements constitute a current flow. By carefully
arranging the combinations of these cells and their resulting magnitudes of current,
different power outputs of solar panels can be achieved. Solar cells are commonly
made from amorphous semiconductors, single crystals and crystalline
(www.chemistryexplained.com, 2015).

The three basic types of PV solar panels are:

 Monocrystalline.
 Polycrystalline.
 Thin film
 Hybrid.

Monocrystalline Solar Panels:

The solar cell is made of single crystalline silicon. The whole cell is aligned in one
direction, which implies that when the sunlight falls at a correct angle they would
achieve a great degree of effectiveness. They have uniform black shading making
them good light absorbers (c-changes, 2015).

Figure ‎4-1: Monocrystalline Panel

Source: (MidSouth building supply, 2008)

MSc Thesis 30
Advantages:

 They are made of high grade silicon hence the efficiency is high.
 They occupy less area on the roof, for the same power output compared to
other types (imformative, 2015).
 They have a long life span compared to other types.

Disadvantages:

 They are relatively expensive.

 There is a high risk of circuit breakdown of the panels due to snow, dirt or
shade.
 At high temperature performance the panels is affected, but less so than
polycrystalline solar panels (imformative, 2015).

Polycrystalline Solar Panel

The Polycrystalline, also known as multicrystalline, is made of cells that are

effectively a slice cut from a block of silicon, consisting of a large number of crystals
(www.solar-facts.com, 2015). All crystals are neither perfectly aligned nor tightly
packed resulting in the panel being less efficient.

Figure ‎4-2: Polycrystalline Panel

Source: (MidSouth building supply, 2008)

MSc Thesis 31
Advantages:

 They are less expensive.

 At high temperature the technical performance is slightly less than
monocrystalline; however it is a minor effect (imformative, 2015).

Disadvantages:

 They are less efficient when compare to monocrystalline.

 They are less space efficiency. They occupy more space on the roof.

Thin film:

Thin film is manufacture by single or several thin layer of photovoltaic material onto a
substrate. The different type of thin film solar cells (imformative, 2015) are classified
based on which photovoltaic material is deposited to a substrate. They are

 Amorphous silicon (a-Si)

 Cadmium telluride (CdTe)
 Copper indium gallium selenide (CIS/CIGS)
 Organic photovoltaic cells (OPC)

Figure ‎4-3: Thin Film Panel

Source: (Canata Energy, 2011)

MSc Thesis 32
Advantage:

 It is cheaper than crystalline solar cells.

 The performance is not affected by shading and high temperature.
 Appearance makes them appealing.

Disadvantage:

 The cost of installing them on roof is high since they are low space efficiency.
 Life time of thin film solar cell is less when compared to crystalline solar cells.

Hybrid Solar Panels:

A hybrid solar panel is made up of crystal silicon layer in which thin layers of intrinsic
and doped amorphous hydrogenated silicon are deposited ( ECOexperts, 2015). In
other words it is the combination of monocrystalline and layer of amorphous. The
efficiency of the panel is quite impressive since it works well even in low sunlight
conditions (c-changes, 2015).

Advantage:

 High efficiency.
 Requires less space.
 Works in low light conditions.

Disadvantage:

 When compare to crystalline panels they are too much expensive and it is not
worth unless you have a limited roof space (c-changes, 2015).

MSc Thesis 33
Comparison of PV Solar Panels:

The comparison is made only between the commonly used solar panels for
residential purposes.

Table ‎4-1: Comparison between Monocrystalline, Polycrystalline and Thin

Film

Monocrystalline Polycrystalline Thin film

Module Efficiency 15-20% 13-16% 6-8%

Cell efficiency 25% 20.4% 13.4%

Area req. for 1kwp 6-9m^2 8-9m^2 13-20m^2

Length of 25years 25years 10-25years

warranty
Cost high Less when less
compared to
monocrystalline
Temperature high Low Tolerates extreme
resistance heat
Source: (The energy informative, 2013)

Based on the comparison it is clear that monocrystalline panels are most effective.
The cost of the panel is high but the power output by monocrystalline panels will be
more when compared to other panel due to high efficiency. Moreover the space
occupied by monocrystalline on the roof is less which reduces the complexity of
installing the panels on the roof. Hence we agree to choose monocrystalline panel
for installing the panels on the roof.

MSc Thesis 34
Mounting Equipment:

Since we are focusing on domestic installation of PV (photovoltaic ) panels, the most

common way for mounting them is by using roof anchors , aluminium mounting
frames and clamps (The Renewable energy hub, 2015).

4.3.2 Roof Anchors:

They are the base for the mounting system which are screwed into the rafter. They
are made up of stainless steel. The shape of roof anchor varies depending upon the
roof tiles such as concrete tiles, slates and rosemary.

Figure ‎4-4: Roof Anchors

Source: (SES, 2015)

MSc Thesis 35
Mounting Frames:

The mounting frames are firmly attached to the roof anchor in order to prevent
displacement. It is made up of two parallel aluminium bars. The solar panels are
mounted over the frame and attached by clamps (EVOENERGY, 2015).

Figure ‎4-5: Mounting Frames

Source: (SES, 2015)

Clamps:

Clamps are the one which holds the solar panel onto the frame. There are two types
of clamps:

 End Clamps
 Mid Clamps

The End Clamps are fixed at the end row of the panels while the middle fits between
two panels and they are equally spaced usually 200m apart. At least four clamps
must be used per panel (EVOENERGY, 2015).

MSc Thesis 36
Figure ‎4-6: Mid Clamp and End Clamp
Source: (Shed project, 2015)

4.3.3 DC-AC Inverters:

The DC-AC Inverters convert direct current (DC) from the solar arrays to alternating
current which can be used in your home and exported back to grid (Energy saving
trust, 2014). It ensures to disconnect if there is a power drop. According to Solar
Energy for Homes (2014), there are three different types of solar inverters used for
different solar systems, although each of them still convert DC to AC. They are:

 Stand-Alone Inverters
 Dual Inverters
 Grid Tie Inverters

Stand-Alone Inverters:

The off-grid solar array makes use of stand-alone inverters. In an off-grid solar
system there is a rechargeable battery which stores the direct current from the solar
array. The direct current is sent to the stand-alone inverter from the battery when it is
necessary and then converted into alternating current (solar energy for homes,
2014).

Dual Inverters:

Dual Inverters are commonly known as backup battery inverters (solar energy for
homes, 2014). They are widely used in multi-functioning solar systems. The
generated power is first stored in the battery. The function of dual inverters is to get
power from batteries and deal with the energy charge it got from the battery through
the on-board available charge controller and supplies the surplus power to your utility

MSc Thesis 37
grid (do it yourself, 2015). In an event of power outage, they are able to supply
alternating current to any specific area when required. Also, they are usually
expensive because of battery usage.

Grid-Tie Inverters:

The Grid-Tie Inverters are less expensive than the other two types of inverters, and
this is because the system does not require batteries. In this solar system the power
output is directly sent to inverter where the conversion of DC to AC takes place
(solar energy for homes, 2014). This AC electricity is used to power the home
appliances and the excess electricity is fed into the grid.

Since the aim of our project is to produce electricity to households and to sell the
excess electricity to the grid; we are focusing on the grid-tie inverters for the purpose
of our project because they slightly vary from other inverters because the AC pure
sine wave signal that coordinated with the waveform from the grid has to be
adequate (Greenage, 2015).

The Grid-Tie Inverters (Energy matters, 2015) are classified as:

 String Inverter
 Micro Inverter
 Central Inverter

String Inverter:

String Inverters are the most commonly used in residential solar power systems
(Energy matters, 2015). They can be linked to a number of photovoltaic solar panels.
When the solar panels operate at same conditions and have same characteristics
the efficiency of the string inverter is higher (Energy saving trust, 2014). More than
one string inverter can be used depending upon the size of installation. They are
installed at some distance from the PV Solar Panels.

MSc Thesis 38
Figure ‎4-7: String Inverter System
Source: (The Energysage, 2015)

Advantage:

 It as a highly flexible design.

 Cost is less.
 Installation cost is less because of simple wiring (Greenage, 2015).
 The efficiency is high.

Disadvantage

 When any one panel in the string is failed, the overall performance of the
inverter is affected.
 The life span is less when compared to micro inverters.
 No panel level MPPT (Energy matters, 2015).

Micro Inverter:

They are small box which are connected close to each panels or at the back of the
panels which converts the DC power produced by a single solar panel to an AC
power (Energy matters, 2015). It includes MPPT (Maximum Power Point Tracking)
which is the principle of taking out the maximum power available from the solar

MSc Thesis 39
module, which helps to increase the electrical output produced by the photovoltaic
system (Greenage, 2015).

Figure ‎4-8: Microinverters System

Source: (The Energysage, 2015)

Advantage:

 Reliability of the inverter is high, which means even if one micro inverter
fails it will not affect the whole system.
 System design is simpler.
 Modules with different characteristics can be used
 Efficiency is high.
 Longer life span.

Disadvantage:

 It is twice the cost when compared to string inverters.

 It has limited number of manufactures since it is a new technology.
 Potentially expensive to replace.
 Based on the positioning some micro inverters produce extreme heat (Energy
matters, 2015).
 Maintenance cost is high.

Central Inverter:

Central inverters are basically large string inverters. They are used generally in large
scale such as in industrial buildings or field installations (Energy matters, 2015).

MSc Thesis 40
 Advantage:

 Efficiency is high.
 Low capital price per watt (Energy matters, 2015).

Disadvantage:

 Produce much noise.

 It occupies huge space.
 When a single panel is affected, the entire system fails.

Table ‎4-2: Comparison between Grid-Tie Inverters

String Inverter Micro Inverter Central Inverter

Power Up to 100 KWp Module power range Above 100 KWp

Efficiency 98% 90-95% 98.5%

Cost cheap expensive Expensive when

compared to String
Inverter
Warranty 5 years More than 5 5 years
years(some
manufacture offers
25 years)
Size small Small compared to large
String Inverter
Source: (Evo Energy, 2015)

Among the three, String Inverters are the mostly used in installation of residential
solar system globally and‎comprising‎a‎great‎number‎of‎the‎world’s‎inverter‎market
(Energysage.com, 2015). And they are cost effective when compared to others.
There is a large number of companies worldwide that manufacture String Inverters
(Energysage.com, 2015), which is more when compared to Micro Inverters. Hence
we agreed to choose String Inverters for installations.

MSc Thesis 41
4.3.4 Disconnect Switches:
It is important to have Disconnect switches while installing PV solar systems in
dwellings in order to turn off the system for safety reasons. They are classified into:

 DC Isolator
 AC Isolator

DC Isolators:

The DC Isolators are used in between high voltage PV arrays and the inverters in
order to disconnect the current flow from PV array to the inverter for safety measures
(Free green electricity, 2010).

Figure ‎4-9: DC Isolator

Source: (Sunshine solar, 2015)

AC Isolators:

AC Isolators act as an interface which disconnects the PV solar system from the
building electricity supply (Free green electricity, 2010). These are provided for
manual disconnect of AC supply from the inverter. It has critical importance in solar
installation to ensure safety during emergency.

MSc Thesis 42
Figure ‎4-10: AC Isolator
Source: (Sunshine solar, 2015)
4.3.5 Cables and Wires:
The wire types used in the installation of solar panels varies based on the conductor
material and the insulation.

Conductor:

Aluminium and Copper are the most common conductors used in residential
installation of solar PV systems. The conductivity of Copper is greater than
Aluminium hence the flow of current in a Copper wire is greater when compared to
Aluminium at same size (CIVICsolar, 2015). Though Aluminium is less expensive
than Copper, it is not ideal for house wiring as they get weakened during installation
while bending (CIVICsolar, 2015).

Insulation:

Insulation is a wire covering which protects the wire from moisture, UV lights, heat or
chemicals. According to CIVICsolar (2015), they are classified into the following:

 THHN which is used in dry places and indoor locations.

 THW, THWN and TW are used indoor locations or in wet outdoor applications
in conduit.
 UF and USE suits for underground applications or in moist places.
 PV Wire, USE-2 and RHW-2 cables have resistance to sunlight and moisture
which allows them to be used outdoors and wet conditions.

It is coded with colours to designate its functions which are essential during
troubleshooting or repair (CIVICsolar, 2015). (Refer appendix D-2)

MSc Thesis 43
The gauge size of the wires can be determined from flow of current through the wire.
The gauge sizes for different current as suggested by Solaratlas (2007) are listed in
the table 4-3 below:

Table ‎4-3: Wire Gauage Size

Source: (Solaratlas, 2007)

MSc Thesis 44
4.4 System Design:

4.4.1 PV Solar System:

The PV Solar System can be designed in order to produce DC to AC power service
which is either interconnected with the utility grid or connected to an energy storage
system (florida solar energy centre, 2014). The photovoltaic solar system is
classified based on the operational requirements and the connections made to the
power source. They are classified as (florida solar energy centre, 2014):

 Stand Alone
 Grid-Tie

Stand- Alone System:

A stand-alone solar system is independent of utility grid and stores the power in a
rechargeable battery which produces the electricity when the solar panels are not
operating i.e. during night time (inbalance-energy, 2015) . In this type of system the
DC power from the solar PV array is stored in the rechargeable battery and the
required power is drawn from the battery converted into AC power by an inverter
which is utilised by the household.

Figure ‎4-11: Stand Alone system

Source: (ACE technologies , 2015)

MSc Thesis 45
Grid-Tie System:

The Grid-Tie PV Solar System is designed in a way that it is interconnected with the
utility grid. There is no need for batteries in this system. The primary component of
the system is a Grid-Tie Inverter which gives AC power in quality required by the
utility grid. When the utility meter is not energized, the power supply to the grid
automatically stops. It has a bi-directional interface between the utility network and
the PV system AC circuits. This makes the AC power from the PV array to either
supply to the households or feed back to the grid when the system output power is
greater than the household demand. At night when the solar output is less, the
power required for household is drawn from the grid (florida solar energy centre,
2014).

Figure ‎4-12: Grid-Tie System

Source: (Xenogyre, 2013)

Our project is based on grid-tie solar system since we intend to sell the excess
electricity to the grid. On choosing Grid-Tie Solar System, we able to produce
electricity to the households and then sell any excess electricity to the grid.

MSc Thesis 46
4.4.2 Size of the System:
Typical residential solar panels can produce up to 3,400KWh of electricity annually
(The ECOexperts, 2015). The residential PV solar system tends to range from 1KW
to 5KW in size. The amount of electricity generated by different sizes of systems as
suggested by The ECOExperts (2015) is tabulated below:

Table ‎4-4: System Size and Annual Output

Total System Size Annual Output Estimated Cost

1 KW 850KWh £3k-£4k

2KW 1,700KWh £4k-£5k

3KW 2,550KWh £5k-£6k

4KW 3,400KWh £6k-£8k

Source: (The ECOexperts, 2015)

MSc Thesis 47
Figure ‎4-13: Electricity Consumption
Source: (Shrink that foot print, 2015)

From Fig. 4:13, it is clear that the average consumption of electricity by a household
in the UK is 4,648KWh per annum.

The average electricity consumption of small, medium and large houses in the UK as
given by UKpower (2015) is listed below:

 For a small house the annual usage is estimated to 2,000KWh.

 For a medium house the annual usage is estimated to 3,100KWh.
 For a large house the annual usage is estimated to 4,600KWh.

The size of the system varies depending upon the amount of energy required. A
basic 4KW system can generate enough electricity for a medium house, whereas a
2KW or 3KW system can generate the required electricity for a small house. A
typical 4KW solar system has the capacity to generate 3,400KWh electricity per
year.

MSc Thesis 48
Based on the specification of the panel we buy (refer appendix D-3), the capacity of
the solar power system we install for a medium house is 3.6 KW. A system consists
of 12 panels which are 300W each.

4.4.3 Inverter and String Sizing

After determining the size of the system, it is important to identify the size of the
inverter. Inverters are commonly identified based on the output in Watts (W). But
also, we have to consider the amount of power that the inverter can receive.
Selecting an inverter is roughly based on identifying inverter capacity matching your
module production. Normally inverter with higher wattage than the system wattage is
chosen. In our case for a medium house with 3.6KW system, we are choosing
inverter with 4380 output wattage (refer appendix D-3). We can also choose the
inverter with 25% less wattage than the system wattage, but as we are a grid
connect system we need to use the inverter with input rating more than the PV array
for safe and efficient operation (Leonics, 2013). The efficiency of the inverter
mentioned in the specification (refer appendix D-3) is 97% which means 3% of
electricity from the array is lost due to heat.

Figure ‎4-14: String Inverter

Source: (The Solar professional, 2015)

After sorting out the wattage match between the inverter and the PV Array, another
important factor is identifying the amount of panels wired in series. This is known as
string sizing. String sizing helps us to determine the circuit voltage. A string is
designed by connecting the panels in series (i.e.) connecting the negative lead of

MSc Thesis 49
one panel to the positive lead of the next panel and the negative lead of that panel is
connected to the positive lead of the next panel.

Figure ‎4-15: Single Series String

Source: (The Solar planner, 2014)

Figure 4:15 shows how the panels are connected in series. For instance, assuming
these four modules have 30V each, which results in a 120V circuit and the current
which flows through the circuit is the same.

For a residential PV Grid-Tie System , the common system used is made of 2 to 4

strings which contain 7 to 12 panels each (The Solar planner, 2014). Each string is
connected in parallel to the next string (i.e.) the positive lead of each string is
connected to the positive lead of the next string and the negative lead of each string
is connected to the negative lead of next string.

MSc Thesis 50
Figure ‎4-16: Multiple Series String
Source: (The Solar planner, 2014).

Figure 4:16 shows three strings which are connected in parallel and results in no
change in the circuit voltage but however the current flow in each string is added up.
For example if the panel is rated with 6amp then the current delivered to the inverter
in this case will 18amp.

The Grid-Tie Inverters can handle different range of voltage as the sunlight that falls
on the panels is not constant throughout the day. The voltage range of the inverter
we have chosen is 100-450 Volts (refer appendix D3). The main aim of string sizing
is to size the panels between these ranges. We need to pay more attention on the
voltage while sizing the string because the solar radiation from sun varies throughout
the day which results in frequent change in voltage. The voltage of the PV Array will
be small during the morning, high at noon and again small in the evening. And
moreover, during cold days, they may even exceed the threshold of the inverter
which would be the end the life of the inverter. It is necessary to match the voltage of
all the strings because if the voltage in the strings varies, it affects the power
efficiency of the system.

MSc Thesis 51
In our case that involves mostly medium sized houses which needs 3.6 KW systems,
we are using the ST300 model panels (12panels each 300Watts) and the
SUNTWINS 4000TL string inverter (Refer Appendix D3 for Specification). We need
to string the system based on the range of the inverter. The system voltage (The
Solar planner, 2014) can be found by:

System Voltage= String Size × Maximum Power Voltage of the Panel (Vm) (for our
model Vm=37.15, refer Appendix D3)

If the panels are connected in a single string then the system voltage will be
446Volts which comes within the maximum voltage the inverter can take which is
500Volts. If the panels are wired in two strings with 6 panels in each string then the
system voltage will be 223Volts which comes within the range of the inverter.

The current flow through the system (The Solar planner, 2014) can be calculated
from:

System Current= No. of Strings × Module Current (for our model Isc=8.72A, Refer
Appendix D-3)

If the panels are wired in single string, the current flow through the system is 8.72A
(1*8.72). When it is wired in two strings, the current flow through the system is
17.44A (2*8.72). In both cases current flow is not exceeding the maximum limit
allowed the inverter which is 20A (Refer Appendix D-3).

Table ‎4-5: Inverter Ratings

Single String Double String

System voltage 446Volts 223Volts
System current 8.72A 17.44A
Max. Voltage and current allowed by inverter is 500 volts and 20A

Source: (Mike Holt, 2011)

As a worst case scenario, it is believed that there will be increase in voltage due to
cold ambient temperature in the PV Array. So it is necessary to calculate highest
potential voltage of the system during cold days. An article by NEC (National

MSc Thesis 52
Electrical Code) addressed this issue. They provided a table for voltage correction
factor to calculate the highest potential voltage during cold days.

Table ‎4-6: Voltage correction factor

Source: (Mike Holt, 2011)

The maximum voltage can be found using the formula (The Solar planner, 2014):

Vmax= Voc× Number of Panels per String× Voltage Correction Factor (for Voc Refer
Appendix D-3, Voltage Correction Factor can be found from the above table for
coldest temperature)

In the UK the coldest temperature ever recorded is -27.2 degree Celsius in 1982
(Met Office, 2014)

The maximum voltage of the system if the arrays are connected in a single string is:

Vmax= 44.5×12×1.21(1.21 is the correction factor for -27.2 degree Celsius from the
table 4:5)

MSc Thesis 53
The maximum voltage of the system is 646.14V which exceeds the range of the
inverter.

If the arrays are connected in two strings with 6 panels each, then the maximum
voltage is:

Vmax= 44.5×6×1.21(1.21 is the correction factor for -27.2 degree Celsius from the
table 4:5)

The maximum voltage of the system is 323.07V which comes within the range of the
inverter.

When comparing both values of panels connected in a single string, the current flow
do not exceed the allowed limit of the inverter but the maximum voltage of the PV
array does. If the panels are connected in 2 strings with 6panels in each, the current
flow and the maximum voltage of the system comes within the range of the inverter.
So we are connecting our panels in 2 strings with 6 panels each.

MSc Thesis 54
4.4.4 Schematic Diagram of a Domestic Solar System

Figure ‎4-17: Domestic Solar System

Source: (Dimplex renewables, 2010)

MSc Thesis 55
4.5 Key Considerations:

4.5.1 Orientation:
It is an important factor which needs to be determined while installing the system.
The first thing that should be taken into account while installing is the direction at
which the panels should face. In order to produce maximum energy from sunlight,
the PV Array must be installed facing south. In some cases we can install facing
south east or south west with little drop in energy which is negligible. Since we are in
northern hemisphere most of the sunlight falls on the panels is from south. If the
panels are installed facing north, there will be a significant drop in energy.

Figure ‎4-18: Annual Solar Radiation at Different Directions

Source: (Solar panel buyer guide, 2012)

MSc Thesis 56
Figure 4:18 represents a 4KW system (16×250W panels). The perfect orientation for
the panels to face while installing is due south. We can also find that there is not
much drop in production if they are installed facing east or West. Meanwhile, when
comparing between the north and south, there is a significant drop in energy for
panels facing north.

Hence we will be installing the solar panels facing south to get maximum energy
from the daylight. In some cases the dwellings which do not have south facing roof,
the solar panels will be installed facing east or west.

4.5.2 Roof Angle:

The solar panels must be installed in a perfect angle on the roof where they get most
amount of sunlight which results in greater electricity. In the UK, a conventional roof
pitches at 30 to 40 degrees which is the suitable angle for solar radiation on the solar
panels (SolarPV, 2015). During summer, the sun is at an angle of 50 to 60 degrees
so, with a roof angle of 30 to 40 degree, it will result in a combined angle of 90
degrees. This is the perfect angle to install in order get maximum intensity of solar
radiation (SolarPV, 2015).

Figure ‎4-19: Annual Solar Radiation at Different Angles

Source: (The Solstats, 2015)

MSc Thesis 57
Figure 4:19 shows the solar energy variation based on the roof angle. We can find
that the solar power produced at 30 to 40 degrees is greater when compare to other
angles. Hence the perfect roof angle to install the system is 30 to 40 degrees (Refer
appendix D-4)

4.5.3 Wind Load:

It is our responsibility to ensure that the PV array on the roof is not blown off by the
wind. Wind loading on the solar modules can be identified based on the following
factors:

 Locations in the solar panels are installed in the UK, the wind speed increases
gradually as we move north.
 Height of the building and the site altitude above the sea level.
 Relative location of the panel on the roof.

Figure ‎4-20: Maximum wind speed in uk

Source: (Blackmore, 2004)

MSc Thesis 58
Figure 4:20 shows the maximum wind speed in different zones in the UK. We can
see that the wind speed is high in zone 4 and zone 5. Therefore, special attention is
needed while installing in these zones. And since we are focusing on the south-east
reign of the UK, we are least worried about the maximum wind speed.

The general equation for calculating wind load according to Blackmore (2004) is:

F=qS×Cp,net×Ca×Aref

Where:

qs= is the Wind Pressure at the height H for the PV installation (refer appendix D-5)

Cp,net= pressure co-efficient of the system (refer appendix D-5).

Ca= factor of safety, normally consider as 1.0.

Aref = area of module exposed to wind.

From this equation we can find the uplift force and the downward force acting on the
solar PV module installed on the roof. So the PV Array fixings should be made to
withstand the calculated uplift and downward force. An example calculation for PV
installation above the roof is mentioned in the Appendix D-5.

MSc Thesis 59
Chapter 5 Installation Description

[Alahmadi, Abdulaziz Madani S]

The process of installing solar panels requires consideration of different factors

ranging from site survey, feasibility, through to installation. The major processes of
the solar panel installation are given below:

 Site Survey;
 Planning Permission;
 Contract;
 Scaffolding;
 Installation Process;

The details for each of the consecutive steps are given in the sections below.

5.2 Site Survey

One of the most critical parameters to be considered before the solar panel
installation is made on any site is the availability of the sunshine on that site
throughout the year. There should be enough solar radiations in order for the solar
PV system to be feasible. To understand the movement of the sun and locate its
position for every minute of the year, the Solar Chart (elevation and azimuth) is used.
It should be noted that the shading greatly affects the productivity of the solar panels
and careful consideration should be made in order to avoid the shading of the panel
(Boxwell, 2012). All of these factors make up the study of Solar Chart to understand
the movement and positions of the Sun which is very important (Maeda, 2011). The
different objectives of the site survey can be identified as the following: (Perform a
site survey, 2014)

 Optimal Spot for PV Arrays

 Calculation of Available Spacing for Array
 Shading Obstructions
 Roof Condition/status
 Home’s‎Main‎Electrical‎Panel‎Characteristics‎and‎Parameters‎‎
 Electrical Components Placing

The shading and sunlight are not the only parameters affecting the energy output of
a solar panel. Apart from the parameters affecting the efficiency of solar panel, there
is a limit up to which the solar panels can produce electricity. The solar panel

MSc Thesis 60
efficiency depicts the amount of solar energy that can be converted to the electrical
energy using that panel. The efficiency constraint is only important when there are
space constraints. The higher the efficiency, the lower the space you would need to
produce a certain amount of power. Mostly, the costs of the solar panels vary with
efficiency, but that is not the point of concern over here. The efficiency of the solar
panels normally varies around 14%-18%. Although these values do not seem much
the panels with such efficiency will be able to produce enough power on a typical
rooftop. (Boxwell ،2012)(Refer to Appendix E-9)

5.2.1 Solar Pathfinder

Table ‎5-1: Solar Pathfinder

Source: (Perez, 2015)

Locating a PV array is hard, especially understanding precisely how much light a

particular solar panel gets during a year. Slopes, trees, structures and different
impediments may shade the PV solar panels and diminish its performance. Also, to
further complicate things, the solar rays continue to change with the seasons. The
array should be situated at the spot on a site that gets the most amount of sunlight.
The Solar Pathfinder is the instrument used for this work. It takes all the information
out for forecasting precisely the amount of sunlight the exhibit will get, at a particular
site, consistently. The Solar Pathfinder is anything but difficult to utilise and
sufficiently systematic to quantify changes in array position down to a couple feet.

MSc Thesis 61
The Solar pathfinder is easy and accurate to identify the continuous changes in array
positions down to a few feet (Perez, 2015).

5.2.2 Solar Panel Orientation

The power output of solar panels is directly proportional to the amount of solar
radiations incident on the panel. The conventional roof pitch of around 30-40
degrees typically seen in the South East of England is considered to be a favourable
position for the solar panels to the incoming radiations. During summer, the solar
panels are positioned at around 50-60 degrees resulting in a combined angle of
around 90 degrees that is considered to be an ideal angle for the solar panels. The
rooftops are regarded as the best position to install the solar panels in domestic
homes. Such solutions work with rooftops facing south and also flat rooftops
providing the flexibility to mount the solar panels at the required angles (Solar
powerjoe, 2015).

The other way around is the mounting of solar panels on the walls. However, this is
the most suitable option only when the solar panels are longer, slimmer, and are
mounted at such angles that they are not far from the wall. The installations of the
solar panels is not only limited to these schemes and they can be simply placed on
ground, on the roofs of shed, and other buildings. All of these options require us to
follow the rules regarding elevation to be observed (Maeda, 2011) (Snow, 2006).
However, GSS will only install on rooftops in accordance with UK legislation.

MSc Thesis 62
5.2.3 Roof Pitch
The inclination of a rooftop communicated as the ascent's proportion of the rooftop to
the span. Additional roofing material is needed to cover the expanded rooftop range
when the incline or pitch is enormous (Construction.com, n.d.).

Figure ‎5-1: Solar Pitch

Source: (Xenogyre, 2013)

5.2.4 Temperature
The temperature of the solar panel directly affects the amount of power produced.
When temperature increases above the standard operating conditions, this causes
the power output to start dropping (The Green Age, 2015). Therefore, as
recommended we will mount the panels a couple of inches above the surface so that
enough air may pass above and below the panels to keep the panels cool. However,
there are some panels that are manufactured with this consideration in mind for the
hot climates; this is out of scope for our project.

5.2.5 Shade
The shading can have drastic impacts on the output of the solar panels (Boxwell,
2012). Even shading that covers over 5% of the total solar panel area may reduce
the solar power output by more than 50%. Hence, the complete analysis of the
rooftop to assess the shading patterns across the year is very important. (Snow,
2006).

5.2.6 Front Surface Soiling

Solar panels cannot perform as expected when there is dirt or pigeon dropping which
covers the surface of the panels and make them produce less power. It has been

MSc Thesis 63
recommended that inspections should be made to clean the panels regularly (Anon.,
2015).

5.3 Planning Permission

The solar panel installations on residential houses may not require a special permit if
they are on permitted area. However, there are certain programs that benefit you for
such installation and specific applications should be made in order to gain benefits
(Planning Portal, 2015).

For installing solar panels on listed building or un-conservative area, planning

permission is required. For installing solar panels on listed buildings, listed building
consent is required before planning permission. The forms for listed building consent
are available online at the Planning Portal Website. After obtaining the listed building
consent, there is a need to apply for planning permission.

The forms for planning permissions are also available online at the Planning Portal
Website (experts, n.d.).In case of conservative areas, planning permission is not
required in most cases like installing solar panels on the back or sides not facing the
highway. But, if solar panels are facing highways then planning permission is
required for conservative area and forms for planning permission for conservative
area are also available online at the Planning Portal Website. (Planning Portal,
2015). More details on this are given in the Appendix E-8. The major certificate
scheme received for Solar PV systems is given below.

5.3.1 Microgeneration Certification Scheme (MCS)

MCS, backed by the Department of Energy and Climate Change, is considered as
an authentic quality assurance scheme across the Globe. This scheme provides
certificates for the microgeneration technologies that use renewable resources to
produce heat and electricity (MCS, 2015). MCS certification is also imposed as
eligibility requirement for various financial incentives introduced by governments
such as Feed-In-Tariff (FIT) and Renewable Heat Incentive (RHI) (MCS, 2015). It is
used to ensure that microgeneration products are installed with high standards by
both product and installation companies. This is usually the certification scheme
adopted in residential buildings for the Solar PV systems.

MSc Thesis 64
To confirm that the manufacturers and installers are following MCS standards,
various Certification Bodies have been accredited by United Kingdom Accreditation
Services (UKAS). If a product manufacturer or installer wants to get MCS
certification, they need to get in touch with these bodies to check for the certification
fee and application timeline. The applications must be submitted to these bodies in
order to become a certified product manufacturer or installer (Intertek , 2015).

For Solar PV installation, following Microgeneration Certification Scheme (MCS) is

required for legal businesses (Scheme, 2015): See Appendix E-5, E-6 and E-7 for
examples on MCS.

General Scheme Requirements

The following are the general MCS certifications required for PV installation:

 MCS 001
 MCS 020
 MCS 023 (optional)
 MCS 025

Technology Specific Scheme Requirements

The following are the technology specific MCS certifications that are required for PV
installation:

 MIS 3001
 MCS 024
 MIS 3002
 MIS 3007
 MIS 3007 – 2

The following are the supplementary MCS certifications that are required for PV
installation:

 MIS 3002
 MIS 3003
 MIS 3007 – 2

MSc Thesis 65
5.3.2 Renewable Energy Consumer Code (RECC)

The Renewable Energy Association has set up the Renewable Energy Consumer
Code (RECC) with the aim to provide an exceptional experience for consumers who
plan to install by purchasing or leasing small domestic renewable energy generation
systems. The association claims to always abide by all the high standards set by the
code and they present their logo as manifestation of their commitment (Recc, 2014).

The members of the Renewable Energy Consumers Code are the firms that are
either leasing or selling low carbon heat or small-scale renewable energy systems or
other power generation units that are compatible with the RECC. The RECC covers
the small-scale devices that allow you to produce power for domestic purposes from
renewable/non-renewable or low carbon resources (RECC, 2014).

The Bye-Laws of the Renewable Energy Consumer Code forms the basis of
relationship between the administrator of the Code and the members of the Code.
Each of the Code members has undertaken an agreement to abide by all the laws of
RECC. The Bye-Laws actually form the basis of how the businesses interact with
their consumers. An example on this is given in the Appendix E-6. The different
factors relevant to the consumer service that are considered under the Code and all
Code members are expected to follow the laws are:

 Proper advertising of the products through websites and sales visits;

 Code members must have the latest version of the Code;
 System information and performance is clearly stated;
 Arrangements for the system installation;
 The quality of the goods to be used;
 Conditions of the business clearly stated;
 Check on installation and on-site‎work’s‎standard
 Maintenance assured after-sales
 Actions clearly stated to deal with future problems
 Continuously trying to improve the company procedure

MSc Thesis 66
5.3.3 Electrical Installation Certificate (EIC)
EIC is a safety certificate given by the contractor to the person ordering the electrical
work (NICEIC, 2015). This certificate guarantees that all steps of electrical
installation like design, construction and testing, are done according to the BS 7671
(IET wiring regulations) (Electrical installation, 2014). This certificate is a legal
requirement in the UK for all electrical installation work.

The Electrical Installation Certificate (EIC) is necessary for the following types of
work:

 New circuit installation i.e. installation of electrical wiring and electrical system
in newly constructed houses, buildings, shops etc.
 New circuit installations in existing structures like houses, buildings, shops
etc.
 Change in the distribution board in houses, buildings, shops etc.

Alteration occurs in existing circuits such that the alteration includes changing or
replacement of protective device (Certificates, 2015).

The original certificate should be given to the customer or the person ordering the
work and a duplicate copy should be kept by the contractor. See Appendix E-2 for an
example on this certificate.

Solar Trade Association

The Solar Trade Association (STA) was established in 1978. STA has worked to
promote the benefits of solar energy and its applications. STA tried to make adoption
of solar energy technologies easier and profitable for both domestic and commercial
users. STA is a not-for-profit association and manages its spending and expenditure
totally from membership fees (Association, 2015).

The Solar Trade Association (STA) is also trying to empower the UK solar
transformation and have set a goal for solar energy to deliver major share of UK
energy by 2030 by enabling a bigger and better solar industry (Association, 2015).

5.3.4 British Photovoltaic Association (BPVA)

BPVA is the National trade association of the UK solar photovoltaic industry. BVPA
has become one of the most auspicious photovoltaic industry platforms since its
formation in 2010. BPVA is one of the most influential and trusted association of the

MSc Thesis 67
Photovoltaic industry. They are fully independent non-profit organisation. BPVA is a
unique association in the UK with 100% focus on solar photovoltaic energy
(Association, 2015).

5.3.5 Legislation
Solar equipment mounted on a house or a block of flats or on a building within the
curtilage requires several conditions to be met. They are listed below as suggested
by Planning Portal (2015):

 The building rooftop should be sited in a way that its effect on the
surroundings is minimized.
 The equipment that is not needed should be removed from the site as soon as
possible.
 The panels should not have elevation higher than the highest part of the roof
excluding chimneys.
 The panels cannot be installed on a building that is within the vicinity of a
scheduled monument.
 The panels must not face the highway if the area is a conservation area or a
World Heritage Site.

5.3.6 Standard and Regulation:

Photovoltaic systems must meet with requirements like BS 7671 and other relevant
standards and codes of practice. In case of Solar PV systems, most of the UK
standards are applied in general terms hence there is a need of research and to
write standards and regulations specifically related to the PV installation. However,
the two documents given below relate with the installation of Solar PV systems
specifically and therefore they are of significant importance:

 Recommendation of engineering G83/1 (2003)

 The IEE Guidance Note 7 to BS 7671, Section 12 Solar PV special location

5.4 Contract
The next step of the process is the contract agreed with the consumer. It protects the
interests of both parties and serves as an agreement. The various important parts of
the contract have been described with the help of a sample contract agreement
(Eyre, 2013).

MSc Thesis 68
5.4.1 Conditionality
The Agreement stated is effective within six months of the commencement date of
the project. If the rights and obligations are not met by either customer or adopter
then this agreement shall become passive and ineffective further (EPA, 2015).

5.4.2 Supplier Obligations for Installation

All the parties will agree a timeline for the complete installation and operation of
Solar PV system.

The supplier shall be responsible for following responsibilities:

 Loading, transporting and unloading of all components of Solar Power Project

to‎the‎customer’s‎premises.
 Completing the designing and installation of Solar PV systems;
 Ensure the normal operation of Solar PV systems as per standards
throughout the length of agreement.
 Maintenance of the Solar PV systems according to the agreed standards.
 Maintenance will be provided free in the first year by the supplier.
 The supplier will give warranty that Solar PV system shall conform to all the
specifications agreed and the customer shall benefit from only those
warranties.
 The supplier is not responsible to pay any expenses of maintaining, repairing,
inspecting or replacing to the customer.
 The supplier can vary the position of Solar Power Project, which includes
photovoltaic cells.
 The supplier shall discuss with the customer before doing any kind of changes
in position (Windustry, 2007).

5.4.3 Title and Risk

Solar PV system shall remain a property titled to the supplier for the whole duration
of agreement and the customer has no right or interest in the system. But the
Supplier is bound to perform all its duties stated under this agreement (Graham
D.Vinter, 2006).

MSc Thesis 69
5.4.4 Customer Obligations
The customer shall oblige to the following terms during the length of agreement:

 The customer shall respond to any request by the supplier for guidance or
instructions which could enable the supplier to perform its duties as per this
agreement;
 The change or alteration to any part of the Solar PV system shall not be
allowed of the customer;
 The customer is not allowed to interfere or damage Solar PV system and the
customer should use all reasonable resources for the security of Solar Power
Project;
 The customer shall not do any activity which will prevent the light falling on the
photovoltaic cells of the Solar PV system;
 The customer shall ensure that the supplier exercise its rights and perform its
duties according to this agreement and the customer shall provide all
reasonable resources for this purpose. The customer shall provide constant
uninterruptable A.C. to the Solar Power Project so that the Supplier could
operate it at optimum performance levels;
 The customer shall inform the supplier of any fault or damage to Solar panels
or‎the‎Customer’s‎property‎but‎customer‎shall‎not‎take‎any‎steps‎to‎repair‎the‎
fault or damage; and
 The customer shall ensure that Solar PV system remains identifiable as the
Supplier’s‎property.

The customer shall give following warranties to the supplier:

 The customer has all the power and authority to take any reasonable actions
to meet tendering requirements and specifications which enables both the
supplier and the customer to perform their obligations under this agreement;
and
 The supplier shall respect the rights granted by the customer in this
agreement and shall not abuse those rights or restrictions which affects the
customer’s‎property.

MSc Thesis 70
5.4.5 Consents
In connection with the installation, operation and maintenance of the Solar PV
system and the generation of the electricity:

 The supplier shall be responsible for planning, building control consents and
environmental protection under the United Kingdom legislation in order to
install the Solar Power Project; and
 The customer shall be responsible for obtaining and maintaining any other
consent under this agreement in order to allow the supplier to install and
operate Solar PV system.

5.4.6 Electricity Power Output

The following clauses will be relevant to electricity power output.

 On or after the commencement date of project, the customer shall be obliged

to purchase power from the supplier while the supplier shall be obliged to
supply 100% power, if required, in accordance with this agreement.
 The power generated by the supplier and the exported power shall be
determined as per metering rules which shall remain constant for all purposes
and no party i.e. either the supplier or the customer, have the right to question
metering rules (Evo Energy, 2015).
 The supplier shall not be bound to produce specific amount of power asked by
the customer due to factors which cannot be controlled by the supplier hence
the supplier shall have no liability to the customer in this regard.
 The supplier shall not be liable to any penalty for any shortfall of power in the
Customer’s‎said‎requirements‎as‎the‎customer acknowledges and agrees that
supplier is not intended to fulfil the customer’s‎power requirement.

5.4.7 Charges and Fees

The charges and fees for installation of projects will be handled as following:

 The customer is bound to pay the charges to the supplier according to the
supplier’s‎power‎supply‎in‎accordance‎with‎this clause and agreement. The
customer is entitled to pay the supplier in respect to each quarter on or before
the due date.

MSc Thesis 71
  The supplier is bound to submit a valid invoice to the customer every year
before or on the commencing date of Solar PV system. While the customer is
bound to render the payments and invoices within 15 business days.
 The power rate and the fee shall be increased every year at the date of
commencing of Solar PV system, by a percentage equal to the percentage
increase in the RPI of the past 12 months.
 Proper adjustment will be made when such information becomes available. In
case the metering system fails or data is lost then the supplier has the right to
solely make estimations for charges of generated electricity and exported
electricity. The customer shall pay those charges and the Supplier shall pay
the Fees.
 Currently, all amounts related to this agreement are exclusive of VAT. But, if
required VAT must be payable by the supplier or the customer (as applicable)
according to the United Kingdom legislation.
 If any amount or sum which is payable according to this agreement not paid
by either the supplier or the customer by the due date then that amount or
sum shall bear interest from the due date to the actual payment date at the
rate of 5% per annum of the base‎rate‎set‎by‎the‎Bank‎of‎England’s‎monetary‎
policy committee.

5.4.8 Insurance
The supplier is entitled to take out and maintain insurance which could at least cover
the liabilities of the Solar PV system during the length of the agreement.

The customer is entitled to take out insurance of its property. The insurance should
include:

 Loss caused from fire, storm, flood, earthquake, explosion, aircraft or other
aerial accident, riot, civil commotion, bursting or overflowing of water tanks,
apparatus or pipes and other damage or loss related to the customer’s‎
property; and
 The effects due to external factors like VAT, inflation, escalation of costs and
fees, and rebuilding (Windustry, 2007).

MSc Thesis 72
5.4.9 Term and Termination
This agreement shall commence and become effective from the commencement
date and shall remain effective till the end of the length of the agreement. This
agreement can be extended by mutual agreement of both parties unless terminated
in accordance with this clause 9.

The supplier has the right to terminate this agreement immediately by giving an
advance notice to the customer if any of the following condition occurs:

 The‎customer’s‎property‎destruction‎by‎the‎customer
 Damage or loss to the Solar Power Project due to the customer’s‎negligence‎
to the limit which according to the supplier or‎it’s‎insurer‎is‎beyond‎economic‎
repair; and
 Theft, confiscation, loss or seizure of some or all parts of the Solar Power
Project (Graham D.Vinter, 2006).

Any party i.e. either the supplier or the customer have the right to terminate this
agreement immediately by giving notice to the other if any of the conditions occur:

 The other party fails to pay any due amount as per this agreement and not
been able to rectify such failure within 15 business days of receiving related
notice;
 Any type of threat from the other party like threat to cease its business or
threat to dispose of whole or part of its agreement or threat to stop due
payments and debts; or
 A dissolution occurs, a winding-up petition or resolution is presented and this
petition or resolution not withdrawn or discharged within 15 days.

The customer has the right to terminate this agreement‎by‎giving‎eight‎months’‎

notice to the supplier.

5.4.10 Consequences of Termination

If this agreement terminates due to the customer’s‎fault‎then‎the‎customer is bound
to pay termination charges to the supplier on or before due date. However, the
supplier has the right to terminate the lease under this agreement.

MSc Thesis 73
5.4.11 Entire Agreement
This agreement shall be considered as the final authority relating to subject matter of
this agreement and any such document; it also contains the entire agreement and
understanding of all the stakeholders relating to this agreement. It supersedes all
prior documentation and agreements related to the matter under consideration
(Graham D.Vinter, 2006).

5.4.12 No Partnership or Agency

This agreement does not intend to open a partnership between the parties in this
agreement. Any party in this agreement cannot act as agent or representative for the
other party and neither party holds any authority to act in the name of the other party
blind in any way.

5.4.13 Variations and Waivers

 The agreement cannot be changed in any way unless the changes are made
in writing and signed by the other party or its representative and all variations
are expressed.
 Neither party have the right to exercise any waiver of requirements or of any
right or remedy as mentioned in this agreement. Such waiver of requirements,
or rights, or remedy can be made effective if such variations are signed by the
both of the parties of their representatives (Draft backstop power Purchase
agreement, 2014).
 The waiver of any specific breach of provisions of this agreement cannot be
considered as the waiver of the same breach in future unless given in writing
signed by the both parties or their representatives.

5.4.14 Assignment/Subcontracting
 The customer is not entitled to assign any of its right under this agreement to
a third party or delegate its responsibilities as described in this agreement to a
third party, or subcontract the agreement to a third party unless a written
approval from the supplier is obtained.
 The supplier is entitled to assign any of its right under this agreement to a
third party or delegate its responsibilities as described in this agreement to a
third party, or subcontract the agreement to a third party without an approval
from the customer.

MSc Thesis 74
5.4.15 Costs
Each party of this agreement shall bear its own expenses and costs incurred at
different stages of the agreement preparation, negotiation, and completion unless
expressly stated in this agreement or any other agreement that can be made part of
this agreement.

5.4.16 Severability
If any provision or term or part of this agreement is declared invalid, illegal,
unenforceable for any reason whatsoever, all the other terms, provisions, parts of
this agreement shall be effective in the same manner as they would have been with
that term present, but without its involvement in any other provision, or term, or part
of this agreement. All the stakeholder parties in this agreement must replace that
offending provision, term or part of the agreement with a term, provision or part with
equivalent commercial and economic impacts.

5.4.17 Notices
Any notification, assent, solicitation, interest, Approval or other correspondence to be
given or made under or regarding this agreement must be in English, in composing
and signed by or behalf the one who suppose giving it (each being a‎“Notice”‎for‎the‎
purposes of this clause)

Service of Notice must be delivered with one of the following methods:

 The Service of Notice will be considered effective if it is delivered by hand on

the address agreed upon in this agreement. The time of effectiveness starts
immediately if the notice is delivered within the business day timings and the
next day if the notice is delivered at any other time.
 The Service of Notice shall be deemed served on the next business day
following the day of posting through first class post to the address agreed
upon in this agreement.
 The Service of Notice shall be deemed delivered on the same business day if
dispatched during the day timings and next business day if dispatched at any
other time. The Notice will be considered effective if the transmission receipt
is also dispatched to the recipient using a method described in the clauses of
this agreement (Harrington, 2013).

MSc Thesis 75
5.4.18 Governing Law
The laws of England and Wales govern the rights and obligations of all parties in this
agreement and every clause of this agreement must be in accordance with the
aforementioned laws. By agreeing to this clause, each party is assumed to
irrevocably agree to submit to the courts of England and Wales (Draft backstop
power Purchase agreement, 2014).More details on this is given in the Appendix E-1.

5.4.19 Maintenance
Like other machinery and instrument, maintenance and regular inspection of Solar
PV system is necessary and required in order to increase the life span of the PV
system and security of investment. Electrical tests conducted during inspection
include visual inspection by trained installers to electrical circuits. Such inspection
and maintenance determine the underperformance issues as well as significant
equipment failures.

Main Components Involved in a Maintenance Contract

Every system and client of Solar PV systems has different requirements, but the following are
some of the common services provided by the installers during regular inspection:

 Regular cleaning
 Panels Inspection
 PV module string tests
 Checking inverter system
 Isolator, Cabling check and distribution board
 Checking meter
 Label check
 Analysis of production system
 Inspection for voltage and current
 maintenance report production
 Faulty items repair and replacement

Cost of Maintenance

The cost of Maintenance and inspection of commercial PV systems starts from £250
per annum. (Maintenace , 2015) (MCS, 2012)

MSc Thesis 76
5.5 Scaffolding
For scaffolding installation, the parent installer company will need to hire a top rated
company in the UK. The installer company will make sure that it is safe and sound
for the installation to be started and this assessment is done 2-3 days prior to the
installation. The total cost of solar panel installation will include the cost of
scaffolding installation.

The chief objective of the scaffolding installation is providing the operating platform
for the solar panel installers to reach on the roof eaves and rails. The standards of
the scaffolding are always maintained no matter how much difficult as the life of the
construction workers have no replacement and they should be provided with a safe
environment to work in. The cost of training to install scaffolding will cost around
£200. On the other hand, outsourcing a company for this task costs only around £30,
saving the money in the process and also takes only around few hours to install
scaffolding.

5.6 Installation Process

After the scaffolding is the commencement of the installations. The installations
however have several steps as given below:

5.6.1 Safety
For the safety of installers during installation of solar photovoltaic panels, steps must
be taken during planning and design stage. Sometimes CDM regulations are
required‎for‎installer’s‎safety.‎The‎main‎safety issues during installation of
photovoltaic panels are as follows:

 The supply of electrical energy from PV modules cannot be terminated

therefore steps must be taken so that live parts of the panel are not being
touched during installation, use and maintenance or those live parts must be
covered so that they are not accessible.
 Photovoltaic modules are current-limiting devices therefore unconventional
approach must be employed while designing fault protection devices like
fuses or circuit breakers. These fault protection devices should have the
ability to not blow up under short circuit conditions.

MSc Thesis 77
  Most electrical wiring done is the AC wiring but PV systems use DC wiring
which is not known by most of the electrical installers therefore it must be
ensured that the electrical installers have proper knowledge and required
experience of DC wiring.

5.6.2 Fitting the Roof Anchors

Figure ‎5-2: Fitting the Anchors

Source: (Evo Energy, 2015)

This part is basically utilization of the information gathered during the initial survey.
The installers read that information and localize the place where the solar panels
must be installed on the rooftop. Once the place is localized, the roof anchors are
then screwed into the rafters by installers (Evo Energy, 2015).

Firstly the installers locate the places where the rafters are with respect to the
previous tiles of the roof. After that, the anchors are placed at the desired place in
addition to the tiles of the roofs. Once this task is done, the whole system is
rechecked so that the panels take the proper seating.

The selection of anchors depends upon the type of rooftop under consideration.
There are various types of rooftops with each requiring special types of anchors for
durable performance. The installation experts take this consideration into mind while
selecting the appropriate anchors.

5.6.3 Attaching the Frames

After the anchors installation, the frames made up of aluminium bars are placed into
the anchors and screwed. The position of the bars is carefully determined as this is
an important factor in proper installation of the panel to make it look proper.

MSc Thesis 78
5.6.4 Installing the Panels

Figure ‎5-3: Installing the panels

Source: (Evo Energy, 2015)

The next step of installation is clamping of the solar panels into their designated
places. The placement of the panels into rows or columns is up to the installer to
decide whatever he finds suitable to that particular location. After clamping the
panels, measurements are taken to check whether they have been placed right or
not.

In most of the cases, rooftops are not completely straight especially the ridges.
Hence the eaves will not be in parallel to each other in most of the cases. As
aesthetics are also important, so the consideration must be taken in order for panel
to look good. The installation team ensures that the customer is satisfied with the
outlook of the project.

5.6.5 Wiring the Panels

The manufacturers have already wired the panels and connecting them with each
other is fairly an easy task. Depending upon the shading patterns, the voltage
requirements, and ampere ratings the exact configuration of the panels can be
calculated. The electric connections are then made over the roof tiles.

5.6.6 Wiring the Panels to the Inverter:

To connect the solar panels with the rest of the system, the DC wires are used from
panels to the charge controller. The installation team will try to hide the wires under
the solar panels, as there is plenty of space there. The wires are shielded with a
sleeve to avoid the tiles from damaging the wires. The wiring of the panels depends

MSc Thesis 79
upon the type of roof being used for installation. For example, a solar flash bracket
may be used for wiring in case of flat roof.

5.6.7 Inside the Home:

Figure ‎5-4: Placing the inverter

Source: (Electrical installation, 2014)

After finishing the roof work, the installation team moves into the house. The next
objective is to wire the house in a way that the electricity is supplied to all parts of the
room. The team also ensures the safety of the equipment by finding the most
appropriate position for placing inverter and other equipment.

After that, the generation meter and latest consumer box is installed near the main
distribution/ fuse box used for the existing power supply. This part is done before the
final connection is made to ensure the safety. The power is turned off during this
phase for at least half an hour to ensure the safety of the workers.

5.6.8 Commissioning the System

The final step after the installation and connecting the wires is commission of the
system. The installation team turns on the switch and power up the system. Once
the system is up, the voltage reading are measured and sent to the main office so
that they can be compared to the expected performance. This step ensures that the
installation company maintains the high quality.

MSc Thesis 80
5.6.9 Time Taken
Approximately 36 total man-hours (in a team of 3 staffs) are needed to install a solar
system of 4kW and consisting of around 13 panels. This time includes the site
survey, installation, and commissioning of the system.

5.6.10 Testing the System

The performance of solar panels should meet the requirements of BS7671. Testing
and inspection should be documented and should meet the requirements of building
regulations. The inspection and testing of AC circuits is comprehensively explained
in BS 7671 and it’s supporting guides. While the inspection and testing of DC circuits
requires special attention, care must be taken particularly in case of PV array
circuits. The following three documents must be provided after inspection and testing
of installed PV system:

1. Schedule of items inspected

2. Result of the test
3. Certification of the electrical installation

The DC circuit inspection and testing is done basically to test the Solar PV array.
Appendix E-2 covers the testing and inspection as well as the documentation which
should be provided (BRE, 2015).

The steps to test the Solar PV system are:

 First find the voltage and current ratings of the solar panels installed from the
back of the panel
 See if there is enough sunlight to produce the power output. It must be kept in
mind the rated power is only obtained at full and bright sunlight conditions.
 The settings of the Multimeter should be set accordingly to the type of power
you are going to measure like AC power or DC power.
 The main components of the system are solar panels and the inverters, which
should be carefully connected/disconnected. During disconnection the panel
should be first removed from the inverter and the isolators. The opposite
approach should be taken when reconnecting the system.

5.6.11 Personal Protective Equipment

The Personal Protective Equipment (PPE) is the work wear that ensure that
workers are protected from any harm. All workers will be required to wear the

MSc Thesis 81
 PPE it. There are various types of threats that can be avoided using protective
equipment such as hard hats, respirators etc. (OSHA, 2015). Similar
equipment will be required for the workers of solar installation companies.

Table ‎5-2: Cost of PPE

Unit Cost (£) Cost for 18 (£)

Gloves 2.27 40.86

Hard hat 4 72

Shoes 25 450

Total 562.86

Source: Amazon

5.6.12 Signs and Labels

Signs and labelling of installed PV systems is very important. All the labels in the
Solar PV system must be clear, constructed and affixed for the lifetime of the
system. (PV installation system, 2015) See Appendix E-3 and E-4 for examples on
the required type of labelling.

MSc Thesis 82
Chapter 6 Market Analysis

[Rifat Abdul Rahiman]

From the moment solar technology was adopted by various nations there has been a
rise in demand over the years. According to Solar Cell Central (2015), the solar
industry has grown from 19.6 GW (Giga Watt) in 2010 to 55 GW in 2015,
representing a rate of 23% per year. Solar PVs are installed on residential buildings,
commercial buildings and utility plants contributing to the economic growth of
countries. Solar Industry is widely spread all over the world with China generating
the highest amount of electricity followed by Japan and United States of America. In
addition to producing the highest amount of electricity through solar power, China
manufactures‎about‎65%‎of‎world’s‎solar‎systems‎(Appendix‎F-1). The United
Kingdom stands at sixth position in the list of highest power produced through solar
PV (Solar Cell Central, 2015).

Through the introduction of Feed-in-tariff scheme (FIT), clean energy demand and a
rapid reduction of installation costs of solar panels, European countries have
adapted to the technology with Germany, Italy and United Kingdom leading the way
(Solar Cell Central, 2015). Moreover, in the past few years residential buildings in
these countries have started adopting the technology prompting us to venture into
the business of installing solar panels on residential rooftops of the United Kingdom
where the regulations are minimal and the market is flourishing.

The disposition of solar technology in the United Kingdom has received a public
approval rating of 85% among all renewable technologies showing the support from
the community. In an attempt to boost the solar industry, the government has laid
down several strategic principles which include providing opportunities for the local
societies to take part in environmental decisions that might affect them and providing
financial incentives to the customers. The main markets for solar technology in the
United Kingdom are domestic solar PV; building and ground mounted solar PV. For
the purpose of our project we will be concentrating on the domestic residential
buildings only as dictated by the mandate (UK Solar PV Strategy Part 1, 2013).

Solar PV at homes mainly protects the homeowners from rising electricity and the
government incentives help them to recoup the costs of installation. At present there

MSc Thesis 83
are lots of solar powered activities in the United Kingdom and the regular solar
based power in private structures have around 4kWp limit (UK Solar PV Strategy
Part 2, 2014). According to Solar magazine (2015), the solar power in the nation
multiplied in the year 2014 because of a huge reduction of expenses in the previous
couple of years (in the region of 70%). It is observed that Wales and England have
been slow in adjusting to the innovation while Northern Ireland and Scotland are as
still falling behind.

In any case, on broad examination of elements affecting the solar based PV in

diverse parts of the United Kingdom, we noted that the district of South East England
had the most astounding potential for a quick development of sun oriented PV
industry because of various reasons which are given below.

6.2 Distribution of Solar energy in the United Kingdom

The United Kingdom (MET Office, 2015) gets a respectable measure of daylight. The
most amount of daylight is experienced at the South eastern part of the country;
which gets over 1,600 hours of sunlight throughout the year. Additionally, the district
experienced over 640 hours of sunlight amid the late spring (Appendix F-2). When
we consider information given about month to month daylight at Eastbourne, a town
at the south bank of the area, we can see that it experiences around 1900 hours of
daylight (MET Office, 2015).

MSc Thesis 84
 Figure ‎6-1: Solar Distribution in the United Kingdom
Annually
Source: (MET Office, 2015)

Despite the fact that the working of solar powered panels is reliant on the degree of
sunlight they encounter, the atmospheric conditions in the United Kingdom, however,
do not permit full effectiveness in the execution of solar power. The solar panels
output is decreased on account of cloudy and overcast skies. The thickness of
shadiness is dictated by the moistness and precipitation in the nation. Broadly
speaking (MET Office, 2015), the entire of United Kingdom has a normal measure of
dampness at around 78%-82% while the South East of England experiences the
slightest measure of precipitation at around 600mm – 800mm every year. In addition,
the region experienced a minimum measure of snowfall every year at less than 5
days to a most extreme of 20 days over the span of last 30 years (see Appendix F-

MSc Thesis 85
2). It can be seen that the neighbouring districts like East of England and London
has similar figures and conditions that make it appropriate for our expansion of solar
market.

These variables of solar based power legitimise the validity of concentrating our
business of solar panels in the region of South East of England. Besides, the Direct
Normal Irradiance (DNI) which is essential for the establishment of solar panels to
detect the sun's position is most noteworthy in that specific part of UK as
demonstrated in the Figure 6-2. DNI is the measure of sun powered radiation when
sun beam is maintained at an angle of 90 degrees to a unit area of a surface
(Solargis, 2015).

Figure ‎6-2: Direct Normal Irradiance in the United Kingdom (Annually)

Source: Solargis, 2015

MSc Thesis 86
For effective forecasting of solar operations it is critical that we have sufficient data
that is gathered by a number of climate stations over the intended market location
(Appendix F-3). There are 300 climate stations spread throughout the nation where
the South East of England contains the largest amount. This further justifies why it is
advantageous for us to pick this region as a target market. (MET Office, 2015).

6.3 Geographical Distribution

With the population of the United Kingdom reaching 60 million in 2014 (BBC, 2014),
there are 26.7 million households spread across the country. South East of England
has the highest amount of households compared to all other regions in the country,
standing at 3.6 million (GOV.UK, 2015). Moreover percentage growth rate of South
East England (ONS, 2015) stood at 0.90% in 2014 which is 0.20% more than the
average growth rate of the United Kingdom (Appendix F-4). According to official
reports submitted by the government of UK, the average household is expected to
increase over the course of next 20-25 years by a rate of 1.5 times the increase in
population as shown in the Figure 6-3 (GOV UK, 2015). This provides an assurance
in the long term planning of the company.

National Household and Population Projections

70000

60000

50000

40000

30000

20000

10000

0
1 2 3 4 5 6

Total Households (Thousands) Total Household Population (Thousands)

Figure ‎6-3: National Household and Population Projections for 6 years from
2015
Source: GOV UK, 2015

MSc Thesis 87
6.3.1 Roofs
Although the data on households give the statistics on households, it does not
necessarily give us actual number of roofs present. This is due to the presence of
various leasehold properties like apartments and flats available in UK where several
households may share one roof. They are spread across UK with London having the
highest figure encompassing an incredible 1.7 million leasehold properties which
accounts for 50% of their entire households. On the other hand South East of
England have around 0.8 million leasehold properties (Carlex, 2014).

Nevertheless based on the data available from Carlex (2014) and GOV.UK (2015)
the number of roofs available in different regions of the United Kingdom was
calculated and compared. On analysis it was confirmed that South East of England
has the highest number of roofs lying at around 2.8 million (Appendix F-5). Most of
the roofs in the United Kingdom are pitched roofs especially in the South East of
England (Renewables Tool Kit, 2014). These roofs also face the southward direction;
this is effective for the deployment of solar technology as illustrated in the Appendix
F-5 (Solar Power Diary, 2013).

Based on a report published by the Solar Magazine (2015), it was found that South
East of England had a fairly high amount of roofs with solar panels installed on it.
They also have the highest number of roofs without any solar installations relative to
the whole of UK (Table 6-1). This ascertains its potential in attaining an established
solar industry in the region despite the fact that they have already started embracing
this technology (Appendix F-5). Furthermore the neighbouring regions provide a
good potential for future expansions as well with London and East of England having
a high number of roofs without any solar installations.

MSc Thesis 88
Table ‎6-1: Assessment of Market Areas Number of Roofs with Solar PV
Installations and without Solar PV Installations
Roofs with Solar Roofs without
Region
Installation Solar Installation
Wales 31629 1086006

North East 23992 928086

North West 43954 2425406

West Midlands 37552 1898120

Yorks and The Humber 46873 1874169

London 6977 1446546

East Midlands 52366 1693168

East England 69728 1996538

South West 68159 1734983

South East 60064 2759866

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015)

Roofs without Solar PV

3000000
2500000
2000000
1500000
1000000
500000
0

UK Regions

Figure ‎6-4: Number of Roofs without Solar PV Installations

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015)
Target Region
of Interest

MSc Thesis 89
6.4 Electricity consumption and Expenses
About 4.4 Megawatt-hours (MWh) of electricity is consumed per average household
in the South East of England (ONS, 2013). This value is the highest among all
regions in the United Kingdom as shown in the table 6-2. Moreover, 8 out of 10 top
local authorities with highest household energy consumption lie in this same region
(Appendix F-6).

Table ‎6-2: Electricity consumed annually for different regions of the United
Kingdom (MWh)

Electricity Consumed
Region
annually (MWh)
Wales 3.84
North East 3.53
North West 3.94
West Midlands 4.1
Yorks and The Humber 3.8
London 3.95
East Midlands 4.02
East of England 4.38
South West 4.32
South East 4.41

Source: ONS, 2013

The South East of England expended 38,802 GWh in 2013 of which 41% was used
domestically (GOV UK, 2013). This is a very high value and the aggregate number of
electricity meters in the region is the largest in the nation remaining at 4,086 km
(Appendix F-6).

6.4.1 Cost of Solar PV system Installation

One of the real explanations behind the boom of solar based industry is because of
the falling expenses of the Solar PV system. This is because of the rise in the
number of solar PV industries over recent years. The other reason is due to the
incentives provided by the government such as the FIT which has helped bring down
the prices. As demonstrated in figure 6-5 (GOV.UK, 2015), there has been a
reduction of £1,000.00 in the normal costs of installation (0-4kWp limit) between April

MSc Thesis 90
2014 and March 2015. The mean worth reduced from about £8900.00 to £7900.00.
This gives us a premise on which to work monetarily towards meeting our objectives.

A further 20% reduction in the total expenses of installations is expected by 2020

allowing solar PV systems to become even more competitive with other major
electricity generation technologies (UK Solar PV Strategy Part 1, 2013).

9000
Price per Solar PV Installation (£)

8800
8600
8400
8200
8000
7800
7600
7400
7200

Months

Figure ‎6-5: Mean cost of Solar PV installation in the UK (April 2014 - March
2015)
Source: GOV UK, 2015

MSc Thesis 91
6.5 Feed-in-Tariff and Carbon Dioxide savings
When customers install solar PV, they get paid for the electricity that is produced
whether it is being used by themselves or being exported to the national grid. Export
to the grid is done when there is an excess of electricity generated. This occurs
through the Feed-in-tariff scheme set up by the Government for a span of 25 years
(Energy Saving Trust, 2014).

To exploit complete benefits of Feed-in-tariff (FIT) scheme the installation has to be

registered with the Microgeneration Certification Scheme (MCS). Installations done
for 4kWp with an Energy Performance Certificate (EPC) band of D or above gives an
FIT rate of 12.92p/kWh. Otherwise the rate stands at only 5.94p/kWh (Energy Saving
Trust, 2014). Similarly the export tariff allows you to generate 4.85p/kWh in both the
cases (Table 6-3).

Table ‎6-3: FIT rates (July 2015 - December 2015)

Generation tariff Export tariff

1 Jul 15' to 30 Sep 1 Oct 15' to 31 1 Jul 15' to

15' Dec 15' 30 Dec 15'
Solar PV System
EPC EPC not EPC EPC not
size limit
band D band D band D band D
or or or or
above above above above
(p/kWh) (p/kWh) (p/kWh) (p/kWh)

0kW‎–‎4kW‎ 12.92 5.94 12.47 5.94

4.85
>‎4kW‎–‎10kW 11.71 5.94 11.3 5.94

Source: Energy Saving Trust, 2015

Once an installation is MCS compliant, it gets registered for FIT by sending an

application form together with an MCS certificate. The FIT supplier will confirm the
user’s‎eligibility‎and‎send‎them‎to‎the‎Ofgem‎Central‎FIT‎register.‎This‎register‎
records every installation in the scheme (Energy Saving Trust, 2014).

The FIT payments made in 2015 for different parts of the UK are given in the table 6-
4 for the typical residential solar system size of 4kWp (Solar Cell Central, 2015).

MSc Thesis 92
Table ‎6-4: FIT Payment made between 1 April 2015 - 30 September 2015
FIT Generation Payment for system
size of 4kWp (£/yr)
FIT payment Valid FIT payment Valid FIT export Electricity CO2
Location between 1 April between 1 July 15' payment bill savings savings
15' - 30 June 15' - 30 September 15' (£/yr) (£/yr) (KgCO2/yr)
South England £510 £495 £90 £135 1,870 kg

North England £450 £435 £80 £120 1,650 kg

Wales £480 £460 £85 £125 1,750 kg

Scotland £425 £410 £75 £110 1,560 kg

Source: (Solarlex, 2015)

2000

1800

1600

1400

1200

1000

800

600

400

200

0
FIT payment Valid FIT export payment Electricity bill savings CO2 savings
between 1st April - (£/yr) (£/yr) (KgCO2/yr)
30th September
2015 (£/yr)

South England North England Wales Scotland

Figure ‎6-6: FIT Payment made from 1 April 2015 - 30 September 2015
Source: (Solarlex, 2015)

MSc Thesis 93
As observed from the table 6-4 it can be seen that South England provides the
highest amount of FIT payments through both generation and export tariff. They also
save a significant amount of electricity bill and carbon dioxide.

6.5.1 Carbon Dioxide Emissions

In addition to £135 saved annually, the Solar PV saves around 1,870 kg of carbon
dioxide every year per household installation every year (Solarlex, 2015). From the
report by Carbon Independent (2015) it is suggested that about half a million tonnes
of carbon dioxide is released into the atmosphere annually in the South East of
England using the grid power supply. However, the use of solar PV installations in
the region has seen more than a million kg of carbon dioxide saved every year. This
region is also one of the regions with the least amount of carbon dioxide emitted in
the United Kingdom (ONS, 2011).

In 1997, in the Japanese city of Kyoto an agreement was agreed and approved by
140 nations known as Kyoto Protocol to sets limits on the emission of greenhouse
gases like carbon dioxide. These gases are responsible for health calamities
worldwide (UNFCC, 2014).

There are three targets set by the UK in relation to greenhouse gases (Chris Beales,
2015). These are:

 Kyoto Protocol target, which has set a target of 12.5%, cut in emissions to be
met by 2012. This is an internationally recognized target which was already
met in 2004 exceeding expectations.
 A 34% cut in emissions to be met by 2020 which is termed as the Interim
target.
 An 80% cut in emissions to be met by 2050.

The last 2 targets were announced in the April 2009 budget speech and Climate
Change Act 2008 respectively (Chris Beales, 2015). UK has been meeting the set
targets for the reduction of greenhouse gases in the past few years. However the
reduction of carbon dioxide is not going according to plan and they are expected to
struggle in meeting the interim targets if extreme measures are not taken as shown
in figure 6-7. With Solar industry providing a good performance economically and
technically, this will provide us a platform on which to build on.

MSc Thesis 94
Figure ‎6-7: UK Carbon Dioxide targets compared to other Greenhouse gas
targets
Source: Chris Beales, 2015

6.5.2 Degression Rate

With the renewable technologies getting cheaper every year, the Feed-in-Tariffs are
set to decrease progressively over time to reflect this reality. This is done through a
mechanism known as Degression. There are 2 types of degression rates which are,
default degression and contingent degression (Fit Tariffs, 2015). The default
degression is pre-planned or automatic where the FIT rate is reduced automatically
every‎9‎months‎if‎the‎total‎solar‎power‎deployed‎during‎that‎period‎doesn’t‎exceed‎
100,000 kW (GOV.UK, 2015). In event where the deployment exceeds 100,000 kW
in a period of 3 months, degression rate is triggered manually as shown in the table
6-5, Contingent Degression. The degression rate increases by a higher rate when
the deployment of solar power reaches a higher point.

The FIT rate for 0-4kW (residential buildings) currently stands at 12.92p/kWh which
was reduced from 13.88p/kWh at the start of the year (Solar Power Portal, 2015). A
more comprehensive detail of the FIT registrations and the Degression are given in
the Appendix F-7.

MSc Thesis 95
Table ‎6-5: Degression Rates for FIT in the United Kingdom

Solar photovoltaic 0-10 kW

Deployment in period
Degression
(kW)

Point 1 up to 100,000 none

Point 2 100,000 - 200,000 3.50%

Point 3 200,000 - 250,000 7%

Point 4 250,000 - 300,000 14%

Point 5 over 300,000 28%

Source: GOV UK, 2015

6.6 Business Locations

6.6.1 Sea Port

Port of Dover is one of the major ports in the United Kingdom situated in the county
of Kent in South East England. This port is undoubtedly the best choice for
importing our solar panels and other necessary equipment from China (Appendix F-
9). Conducting trades worth of £100 billion, there has been an increase in 10% of the
total tonnage handled in 2014 compared to the previous year as shown in table 6-6.
This shows its reputation, stability and potential for use for our imports (GOV.UK,
2014). The port boasts of 24 hour access to the facilities and quay water depth
exceeding 8 metres allowing it to take only about 45 minutes for the containers to
berth (Dover Port, 2015).

MSc Thesis 96
Table ‎6-6: Busiest Ports of the United Kingdom

2012 2013 Percentage

Port
(Tonnage) (Tonnage) change (%)
Grimsby and Immingham 60.1 62.6 4

London 43.7 43.2 1

Milford Haven 39.8 41.1 3

Tees and Hartlepool 34 37.6 11

Southampton 38.1 35.8 6

Liverpool 32.9 31.1 5

Forth 25.3 26.4 4

Felixstowe 26.3 26.2 0

Dover 22.9 25.3 10

Belfast 15.2 16.8 11

Source: GOV UK, 2014

6.6.2 Access
The region has low-priced office and storage premises which are available near to
the port. There are also several accesses to major motorways like M20, M25 and M2
(Milford, 2015). Additionally the county of Kent is situated in a location neighbouring
London‎and‎East‎of‎England‎allowing‎an‎easier‎expansion‎of‎the‎company’s‎market‎
in the future. It strategic location makes it an ideal region to service most of the UK
market.

6.6.3 Office and Storage

Our research has brought us to a conclusion that best office and storage location will
be the county of Kent which is in within reach of our target market and the port of
Dover. On one hand it provides an easy access to the port and on the other hand
easy access to the market we are currently targeting. The offices available in the
region are relatively cheap and the proximity to the market is short (Appendix F-9). A
price comparison of offices available in selected locations in the south of England is
given in the figure 6-8 which shows that offices in Kent are relatively cheaper.

MSc Thesis 97
 £14,000
£12,000

Price (per annum)

£10,000
£8,000
£6,000
£4,000
£2,000
£0
Kent London Reading West Sussex
Locations

Figure ‎6-8: Lowest Price comparison between Office (with storage) in different
locations situated in the south of UK for a size of 900sqft - 1000sqft
Source: (Right Move, 2015)

6.6.4 Workforce
To succeed in the business it is equally important to have a good workforce
available. According to ONS (2015), South East England had the second highest
number of workforce after Greater London. The region provides both skilled and
unskilled labour as outlined in the Appendix F-9. South East holds the highest
employment rate in the nation. It has the lowest rate of unemployment and claimant
count bringing reassurance in terms of local labour availability (ONS, 2014). An in
depth analysis on the workforce available in the South East of England is provided in
the Appendix F-9.

6.7 Competition
With more than a thousand solar installation companies in the United Kingdom
(Energy Saving Trust, 2014), mostly focusing on the South East of England, the
competition in the solar market is reasonable. Some of the major Solar PV
installation companies in the region are

 Evo Energy
 SolarCentury
 Solar UK Ltd.
 South Downs Solar
 Eternal Energy Systems
 SmartGen

MSc Thesis 98
Even though precise details of the installations done by these companies are
undisclosed, it is known that some of these companies like Evo Energy (Evo Energy,
2015) and SmartGen (Smart Gen, 2015) have handled over 8000 and 3000
domestic solar PV installations respectively. It is important to note that most of our
competitors focus on both residential and commercial solar PV installations.

Companies like Evo Energy and Solar UK Ltd have 34 (Solar UK, 2015) and 100
(Evo Energy, 2015) employees respectively. These offer other services like the
providence of third party loans and the advance payment of insurance (Solar UK,
2015). Furthermore, there are companies have established themselves in the
country like Solar Century which started in 1998 is currently handling over 30 Solar
installation projects (Solar Century, 2015). These pose a formidable competition to
our business.

Although the presence of these companies in the South East of England indicate a
sizeable level of competition, statistics show that starting a solar installation business
in this region is realistic and profitable.

6.8 Information on Local Authorities of South East of England

As of 2015, South East of England has about 3 million roofs spread across 67 local
authorities (see Appendix F-5). The roofs mentioned here are residential roofs which
include houses, bungalows and apartments ideal for our installations.

Our research found that Brighton and Hove unitary authority (UA) had the highest
number of domestic roofs without any form of solar installations; with figures that
stand at around 97,000. It is followed by regions like Medway UA, Milton Keynes and
Southampton (see Table 6-7). Regions with least number of roofs without solar
installations are South Bucks, Adur, Runnymede and Surrey Heath with the least
figure being around 21,000 (Jonathan Whiting, 2015; GOV.UK, 2015; Carlex, 2014;
Solar UK, 2015).

Authorities like Milton Keynes, New Forest and Isle of Wight lead in having the
largest number of roofs with solar installations. Detailed statistics are given in the
Appendix F-10.

MSc Thesis 99
Table ‎6-7: Top 10 sub regions in South East England with Roofs without Solar
PV Installation

Region Roofs without Solar PV

Brighton and Hove UA 97,717 - 96,988

Medway UA 86,203 - 85,556

Milton Keynes 80,200 - 79,592

Southampton 77,736 - 77,152

Portsmouth UA 69,022 - 68,508

New Forest 43,429 - 43,106

Aylesbury Vale 56,522 - 56,094

Basingstoke and Deane 56,522 - 56,094

Wycombe 53,877 - 53,472

Arun 38,954 - 38,659

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 100

 Roofs without Solar PV
120000
100000
80000
60000
40000
20000
0

Top 10 sub regions in South East England with Roofs without

Solar PV Installation

Figure ‎6-9: Top 10 sub regions in South East England with roofs without Solar
PV
Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,
2015)

Since the office, storage and port are all located in the region of Kent, it is important
to understand the extent to which the surrounding areas have embraced the solar
technologies. This not only highlights why we targeted this region but also helps in
the planning of initial marketing strategies.

It was found through assessment that Maidstone had the highest number of roofs
without any solar PV installations; having around 51,000 roofs without solar PV
installations as shown in the figure 6-10. It is closely followed by regions such as
Canterbury, Thanet and Swale. Canterbury has the highest number of roofs with
solar panels installed on them in the region of Kent (Jonathan Whiting, 2015;
GOV.UK, 2015; Carlex, 2014; Solar UK, 2015). The indicated numbers of roofs are
approximately calculated values as explained in the Appendix F-10.

MSc Thesis 101

Table ‎6-8: Number of Roofs without Solar PV in Kent

Region Roofs without Solar PV

Ashford 38,954 - 38,659

Canterbury 48,120 - 47,756

Dartford 33,348 - 33,099

Dover 38,483 - 38,194

Gravesham 31,588 - 31,345

Maidstone 51,567 - 51,180

Sevenoaks 37,714 - 37,430

Shepway 37,714 - 37,430

Swale 45,411 - 45,070

Thanet 47,719 - 47,361

Tonbridge and Malling 39,253 – 38,958

Tunbridgre Wells 38,483 – 38,194

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 102

 60000
Roofs without Solar PV
50000
40000
30000
20000
10000
0

Regions in Kent

Figure ‎6-10: Number of Roofs without Solar PV in Kent

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,
2015)

6.9 Market Forecast

An analysis on forecast was done for Solar PV systems to be installed by 2016
based on data collected from (Jonathan Whiting, 2015; GOV.UK, 2015; Carlex,
2014; Solar UK, 2015). The results show that there is a considerable increase in the
number of roofs with new solar installations. Furthermore, there is also a rise in the
number of new buildings that will require solar installations over South East of
England. This is due to the rapid growth of houses in the UK (GOV UK, 2015).

In the year 2016, Brighton and Hove UA which currently has around 97,000 roofs
without solar installations and 1000 roofs with solar installations, is estimated to have
about 98,000 and 1300 roofs respectively. It is estimated that there will be a total
increase of 13,500 numbers of roofs with solar installations across the South East of
England during the course of the year. The highest increase is expected to be in the
regions of Milton Keynes, New Forest and Isle of Wight with a rise of 472, 457 and
447 respectively as shown in the table 6-9 Data collected from (Carlex, 2014;Solar
UK, 2015;GOV.UK, 2015;Jonathan Whiting, 2015). A detailed statistics on the
forecast done is given in the Appendix F-11.

MSc Thesis 103

Table ‎6-9: Sub Regions with highest expected Increase of residential Solar PV
installations

Expected Increase in
Region Roofs with Solar PV
in 2016

Milton Keynes 472

New Forest 457

Isle of Wight 447

West Oxfordshire 386

Wealden 382

Medway UA 358

Aylesbury Vale 333

Basingstoke and
333
Deane

Southampton 323

Gravesham 298

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

In the county of Kent, Gravesham and Canterbury are expected to receive the
highest number of installations at 298 and 283 respectively (Jonathan Whiting,
2015; GOV.UK, 2015; Carlex, 2014; Solar UK, 2015). This information on current
status of our target market and the expectations for the future gives us a solid
foundation to build our strategies on.

MSc Thesis 104

6.10 Market Risks
When venturing into a new market there is always a risk associated with it. These
include

 Pricing strategies risk where low prices can develop a reputation for bad
quality while high priced products are liable to flop if not properly handled.
 Target market risk where the customers targeted might not affiliate with the
company’s‎products‎and‎services‎which‎can‎lead‎to‎missed‎opportunities.
 Investment on products and promotions based on ineffectual data which can
lead to a waste of money and missed opportunities (Small Business, 2015).
 Increase in competition, lack of innovation and failure to comply with rules and
legislation of the region can affect the performance of the company.
 Natural and man-made disasters in the market area like earthquakes and
terrorism can have a negative impact on the company which requires us to
evaluate the time taken to re-establish the set standards of the company post-
disaster, assess the post-disaster recovery processes and review the image
and brand of the company post disaster (Small Biz Connect, 2010).
 The risk of alteration in the supply chain if the disasters affect their or our
business, which entails the need for an alternate source.
 Communication risks, both internal and external are possible which
necessitates us to look upon non-traditional methods of communication
(Business Victoria, 2015).

The presence of these risks is considered and hence several countermeasures are
taken to ensure the company stays competitive in all circumstances. The
countermeasures are articulated in the risks chapter.

MSc Thesis 105

Chapter 7 Logistics and Supply Chain Management

[Bharath Kumar Munusamy]

The supply chain management is a system in which people, technologies,

information, organizations and resources are involved in taking goods or product
from suppliers to consumers (Coyle, et al., 2012). According to Rushton & Walke
(2007) , effective supply chain management helps to streamline business activities
that aid the maximization of consumer value in order to improve the competitive
advantage in the current marketplace. Supply Chain management provides great
value to the organisation by reducing the costs involved in the entire logistics. It also
provides an effective and efficient means of handling operations (Waters & Rinsler,
2014). Logistics ensures that the right supplier; right transport; right storage; right
timing; right product and right customers are in place. We set out a clear logistics
plan for our business so as to reduce costs to the barest minimum.

7.2 Logistics
According to Golinska (2014) logistics is defined as a movement of products,
services, information and money flow from the actual suppliers to the targeted
consumers. This results in having a controlled system or practice on cost. Data and
communication plays an important role in this competitive business place. Logistics
is a crucial factor in every business that links the right product to the consumers at
the right time. Selecting the right suppliers along with efficient logistics process will
be the key process for succeeding in the competitive business marketplace
(Mendoza, 2007). We are using logistics to our advantage in bringing the cost of
installation of solar panels as low as reasonably possible.

7.3 Economic Order Quantity (EOQ)

Economic order quantity (EOQ) is the amount of a product that should be ordered so
as to minimize the aggregate cost that incorporates ordering expenses and stock
holding expenses (EOQ, 2008). It is the quantity of inventory that should be ordered
in order to manage the inventory as well to reduce the inventory cost. The two main
parts of inventory cost are ordering costs and holding costs. Ordering costs are the
costs that are incurred during every order that are processed. These costs include
the cost for processing the order; paperwork and time spend on processing the

MSc Thesis 106

order. The holding costs are the expenses incurred on holding inventory for a certain
period.

Ordering costs are reduced by making fewer orders per year while holding (carrying)
costs are reduced by holding fewer inventories. In order to have a good balance of
both, we use the EOQ (Obaidullah Jan, 2011) to derive the most economical quantity
to order. If we need to reduce the ordering cost, we need to order more, and that will
in turn, build up the holding cost.

𝐶𝑃
EOQ =√{2 ∗ 𝐴 ∗ ( ])}
𝐶𝐻

Where:

A is the annual demand in units;

CP is the fixed cost per order or ordering cost;

CH is the inventory holding cost per unit per year;

7.3.1 Annual Demand

Annual demand of the solar panels can be calculated by knowing the estimated
number of installations per month. Here in our project, the estimated installation per
month is 104. We already know that one installation (medium energy user) requires
12 panels. This yields 1,248 solar panels over a month, 14, 976 panels over a year.

7.3.2 Cost Per Order or Ordering Cost

The cost per order is the sum of fixed costs that are incurred every time when an
item is ordered. Usually it is the time spent on order processing, checking and
entering the receipt, getting approval and vendor payment. With the use of modern
IT equipment, it is estimated that the cost for this project to make an order will be
£40.00

7.3.3 Holding Cost per Unit per Year

Inventory cost is the cost which is strongly related to storing and maintaining its
inventory over a certain period of time (VERMORE, 2013). Inventory cost of a unit
can be calculated by knowing the annual demand and the inventory cost per year.
Here, the inventory cost will be the cost of renting‎three‎8’‎x‎40’ high cube containers
to be used as storage warehouse. On the arrival of the next delivery the containers

MSc Thesis 107

will be swapped over. This will remove the need for a dedicated warehouse storage
thereby making heft savings. The rent for the three containers will be £288.00 per
month and one insurance cost for the freight is £234.00. Calculating for a year gives
£6,264.00 of inventory cost. The annual demand for the project is 14,976 panels.

Holding cost per unit per year = 6264/14976

= £0.41

So, the holding cost per unit per year will be 41 Pence.

40
EOQ = √(2 ∗ 14976 ∗ (0.41))

= 1,414 units.

An‎8’‎x‎40’ high cube container can hold around 750 solar panels, we are going to
utilise two containers carrying 1500 panels and a third container to carry inverters,
mounting kit, cables and other accessories. This will result in ordering every month
to manage inventory.

7.4 Key Suppliers

The term supplier could be an individual or business who helps to supply goods and
products to some other companies (InvestorWords, 2015). It is very important to
select the right supplier based on our requirements as it plays a crucial role in
providing good services and generation of good profit (Mendoza, 2007). There are
several hundreds of companies manufacturing Monocrystalline solar panels all over
the world. Our choice of the suppliers was based on cost and quality of solar panels,
not overlooking the quality of service provided. The price Comparison of 1500
Monocrystalline solar Panels from the key suppliers are shown in the figure 7:1
below.

MSc Thesis 108

 Comparison of Key Suppliers
£350,000

£300,000

£250,000

£200,000
Cost

£150,000

£100,000

£50,000

£0
Yingli Winaico Suntech Sunel GP Jinko Suntek
Solar solar
Supplier

Figure ‎7-1: Comparison of Key Suppliers

Source: (Anon., 2015)

The above Figure 7:1 summarises and compares the cost of key suppliers in solar
panel markets around the world. The cheapest and efficient solar panel among the
key Supplier are Suntek where the price of one monocrystalline panel is £86.00
(Refer to Appendix G-1). When we compare that price with others which is £144.00
in average, it is remarkably cheaper and the efficiency of our panel is 17.3% (Refer
to Appendix G-1), While the difference in the efficiency may not be much between all
the suppliers, the cost difference is however significant. Suntek therefore becomes
the natural choice supplier for our solar panels. The panels come with 10 Years
warranty (Refer to Appendix G-1) with free replacement. Therefore, it is convenient
to have Suntek as our supplier.

7.5 Suntek supplier

Suntek (our supplier) was established in January 2010 and is located in China. They
produce both monocrystalline and polycrystalline solar panels for markets around the
world. Suntek solar panels are rated as excellent grade of solar cells, made from
reliable materials and proficient workmanship. The use of high-tech equipment,
scientific management and satisfactory products has led to Suntek producing around
150 MW (Refer to Appendix G-2) worth of solar panels. The nearest shipping port

MSc Thesis 109

from the supplier is Ningbo which is located in China, and the destination port is in
Dover located in the UK. The lead time of the product is 5-10 days once the order is
confirmed (Refer to Appendix G-2) .They also provide customized logo, design,
colour and package for their customers for free of cost which reduces the cost for us
immensely. Two panels per cartons are packed and a pallet consists of 26 solar
panels. So, to order 1500 panels, the solar panels will be packed in 58 pallets. The
weight per panel is 23.5kg and the total weight for 1500 panels is 35250kg. The
estimated time of shipping will be 30 days. The inverter, cables, mounting kit,
Isolators and accessories are also purchased from the same supplier as well as the
supplier has direct tie-ups with the manufacturers of those products.

7.6 Transportation
Transportation is a term used for the movement of goods from one place to another.
There are three types of freight that are mostly used for movement of goods which
are air freight, land freight and ocean freight. Depending upon the size and volume of
the goods the mode of transport is selected. Here in this project, we are going with
ocean freight as we are importing three containers full of goods which are almost
impossible in air and land freights. We have shortlisted the leading freight forwarders
from China to UK and they are listed below.

 DFS
 BARRINGTON SHIPPING
 EMC
 GIGABIZ
 WFR

From the above mentioned freight forwarders, the most economic carrier is EMC.
The freight cost of EMC is £5175.00 and £234.00 (Refer to Appendix G-5) for
insurance which is including import duty and taxes which is less expensive than
other above listed forwarders. EMC‎is‎our‎supplier’s‎logistics‎partner‎thus‎giving‎us‎
the most economic price among other forwarders. They also follow CARRIAGE AND
INSURANCE PAID TO (CIP) incoterm. They also rent shipping containers for at a
reasonable cost. We can see the costs for each and every carrier below (Refer to
appendix G-5)

MSc Thesis 110

7.6.1 Containers
Containers provide a safe means of transporting the fragile products. The Containers
will equally provide a secure means of storing our products. . In here we are going
with three 8*40 High Cube containers. Each container can hold about 750 solar
panels. Therefore, 1500 solar panels will be stored in 2 containers and the other
container will hold 110 inverters , 1500 sets of mounting kit, the required amount of
cables,110 DC and 110 AC isolators and other accessories. Free spaces will still be
available for inventory to manage upon the next delivery.

The freight cost for three containers is £5175.00 (Refer to Appendix G-6) and the
insurance cost is £234.00. The rent for the containers for one month is £288.00
(Refer to appendix G-3) which is very cheap when compared to other freight
forwarders. The shipping time is estimated to be about 30 days.

Figure ‎7-2: 8x40 Container

Source: (High Cube Container, 2014)

Figure 7:2 shows a typical 8*40 HQ container; for specification refer to Appendix G-
4.The solar panels are loaded into two containers while the inverters, mounting kit,
cables, isolators and accessories are loaded in the third container. After loading all
those products, there will still be 39cbm left which will be used for extra panels in the
inventory upon the next delivery.

MSc Thesis 111

7.6.2 Full Container Load (FCL)
It is an ISO standard container where this type of container should be opted when
we are importing large number goods from one place to another and there is need to
fill the entire container with goods. It is not necessary to fill every space with panels
as we are renting the entire container. Here in this project, we require 3 containers
so we are opting to go with FCL (Freight Filter, 2013).

7.6.3 Less than a Container Load (LCL)

It is an ISO standard container and this type of container should be opted when the
goods are less than the container capacity. So, in those cases LCL type of
containers can be used to reduce the cost of the freight. (Ej, 2011)

7.7 INCOTERMS
INCOTERMS stands for International Commercial Terms and was established in
1936 by the International Chambers of Commerce (ICC). They are commonly used
in the commercial transactions to bring about clarity in trade (Paul & Kapoor,
2012).incoterms 2010 is widely used incoterms at the present. There are 11 types of
incoterms2010 used in commercial trade (Refer to Appendix G-5). In this project we
are going with Carriage and Insurance Paid to (CIP) because according to this
incoterm the seller has the responsibility to deliver the goods to the buyers agreed
destination place.

7.7.1 Carriage and Insurance Paid To (CIP)

Using the Carriage and Insurance Paid to (CIP), the seller delivers the goods to the
carrier or any third party mentioned by the buyer at an agreed place. In CIP, the
seller signs the contract and pays the necessary costs and insurance required for the
carriage‎from‎the‎port‎till‎the‎buyer’s‎location‎or‎specified‎destination.‎Under‎CIP,‎the‎
seller only needs to buy insurance for minimum cover, if the buyer needs extra
protection for the goods; he needs to put extra premium insurance cover. Here, the
buyer can either stay with insurance obtained by the seller or to go with the extra
insurance cover for more protection. This incoterm will be applicable to all modes of
transport (International Chamber Of Commerce, 2011). Figure 7:3 shows the
responsibility and risks for both supplier and the buyer for all 11 types of Incoterms is
shown.

MSc Thesis 112

Figure ‎7-3: Carriage and Insurance Paid To (CIP)
Source: (FER Fischer & Rechsteiner, 2015)

The most common incoterms used for ocean transport are CIF and CIP. Here, we
are going to compare these two incoterms to get a clear idea and to know the
approximate costs of bringing the products to our destination.

MSc Thesis 113

7.7.2 Cost Comparison of CIF and CIP
Table ‎7-1 Price Comparison of CIF and CIP

COSTS CIF CIP

FREIGHT £4,675 £5,175

INSURANCE £234 £234

RENT OF CONTAINERS £288 £288

TOTAL £5,175 £5,697

From Table 7:2, we can clearly see that the cost for the freight for CIF is £5,175.00
(Refer to Appendix G-6) and for CIP its £5,697.00 (Refer to Appendix G-6)). The cost
of CIF is cheaper than CIP. However in this project we are going to use CIP because
the risk of bringing the goods directly to our destination is very low and also the seller
bears the risks for the goods for certain extent.

7.8 Direct Costs

Direct costs are the cost which involves material, labour and expenses in producing
a product (Hansen, et al., 2007). Here in our project, where we are importing the
finished product directly. So here, direct cost are the cost that are directly involved in
importing the products. Direct cost is the actual cost for the products and hence it is
necessary to know the cost for each individual cost to find out the cost per
installation.

Direct cost includes the cost of the products, freight cost, rent of the containers and
insurance cost. These costs are then compared between China and UK in order to
select a preferred supplier. The direct costs comparison between China and UK are
shown in Table 8-1 below.

MSc Thesis 114

Table ‎7-2: Direct Cost Comparison of China and UK

Items China UK

1500 Panels £129,000 £430,500

110 Inverters £45,760 £98,890

Cables And Wires Free £1,725

110 AC isolators £660 £2,640

110 DC isolators £990 £3,850

1500 Sets of Mounting Accessories £34, 500 £72,000

Rent for three 8X40 HQ containers £288 NIL

Freight Cost £5,175 NIL

Insurance £234 NIL

Total Cost £216,607 £609,630

The cost of 1500 monocrystalline solar panels in China is £129,000 (Refer to

Appendix G-1) which is cheaper when compared to UK which is £430,500 (Refer to
Appendix G-6). The cost of the solar panels is three times higher than that of China.
So, we have decided to import the panels from China. If we compare the cost of the
inverters, the cost of 110 string inverter in China is £45,760(Refer to Appendix G-6)
whereas in the UK its £98,890(Refer to Appendix G-6). Again the cost of the
inverters are higher in the UK. If we compare the cost of the cables, in China, our
supplier has agreed to give all the necessary cables for free of cost since we are
buying from them in bulk. Whereas in the UK, the cost of the cables is £1,650
assuming £1 per metre on average of 5 metre per installation for 110 installations.
The price of ac and dc isolator switches are even higher in UK when compared to
China where the cost of 110 ac and dc isolator switches in UK are £2,640 (Refer to
Appendix G-6) and £3850 (Refer to Appendix G-6) where in China it’s‎cheaper‎and‎
the cost of ac and dc isolators are £660 (Refer to Appendix G-6) and £990 (Refer to

MSc Thesis 115

Appendix G-6) which is less expensive when compared to UK. If we compare the
cost of 1500 mounting kit between China and the UK, it costs £35,000 in China
(Refer to Appendix G-6) which is much cheaper when compared to UK with £72,000
(Refer to Appendix G-6).

When we compare the freight rates between leading freight forwarders, EMC is
cheaper. The freight cost of EMC is £5,175 (Refer to Appendix G-6) which is
cheaper than other leading carriers which includes import duties and taxes paid. So,
we are opted to go with the cheapest Carrier. The insurance cost of the freight is
given as £234 which is also less expensive.

Direct costs comparison between

China and UK

700,000
600,000
500,000
Costs (£)

400,000
300,000
200,000
100,000
0
China UK

Figure ‎7-4 Direct costs comparison between China and UK

The increase in cost of the panels is due to heavy taxes by the government on the
imported products in the UK. The same scenario can be seen in inverter, brackets,
cables, isolators and accessories cost which adds up to the total cost of those
products in UK which is £609,630 where in China is £216,207 Even though there are
no freight cost if we buy the products In UK, the freight cost of the products from
China is £5,697 (AppendixG-6) but still the direct cost in UK is £609,630 which is
almost triple the cost than China which is £216,207 which is shown in figure 8:1.

MSc Thesis 116

So, the costs of the products in China are much cheaper than the UK. Therefore, we
are opted to import the products from China as we can clearly see that the direct
costs in the UK almost triple the cost in China.

The breakdown of the direct cost involving supplies from China where we are going
to import our products from can be seen in Figure 7-5.

DIrect Costs of China (£)

Cost of 110
inverters, 45,760 Cost of Mounting
Accessories, 34,500 Rent of Containers,
288
Cost of 110 AC
isolators, 660
Insurance,
234
Freight cost, 5,175
Other, 2172

Cost of
cables and
Cost of 1500 panels, wires, 0
Cost of 110 DC
129,000
isolators, 990

Cost of 1500 panels Cost of 110 inverters

Cost of Mounting Accessories Freight cost
Cost of 110 DC isolators Cost of 110 AC isolators
Rent of Containers Insurance
Cost of cables and wires

Figure ‎7-5 Direct Costs

MSc Thesis 117

Chapter 8 Risks and Risk Management

[Peri Pedro Adukpo-Egi]

Risks of a project are uncertain events that if they occur, would have positive or
negative‎effects‎on‎the‎project’s‎objectives (Prince2, 2014). Positive effects are
generally known as opportunities. Risks management is very important in any project
since it reveals potential bottlenecks that are associated with a project. Management
of risks also helps us to respond accordingly in order to achieve project success in
terms of cost, time and quality.

The risks involved in this project are going to be analysed and all possible
management activities necessary in responding to the risks will be considered in
order to achieve optimum results.

8.2 Risk Management

The term Risk Management is described as recognising risks, analysing and
addressing the risks in order for an organisation to accomplish its goals (Institute of
Risk Management, 2015).

The importance of risk management cannot be overemphasised in any project. This

is especially true for a project that requires technical expertise and deals with the
public like our project. On that note, the risks will be identified, properly analysed and
assessed in details, and adequate responses would be made to prevent, reduce or
transfer the effects of the identified risks.

The following is the process of risk management for our project:

 Risk Identification;
 Risk Analysis;
 Risk Responses;
 Risk Monitoring;

MSc Thesis 118

The following figure shows the process by which risks will be managed.

Figure 8-‎8-1: Risk Management Process

8.2.1 Risk Identification

This is a process an individual or business uses to determine the risks associated
with a project that may affect project objectives (Mitre.org, 2013).

The risks were identified using three methods as suggested by Clear Risk Inc.
(2013). These methods are:

a) Brainstorming: Group brainstorming was carried out to identify and assess

some of the risks. We conducted group workshops to identify the risks
associated with our project.
b) Risk List/ Research: Research was done on risks arising from similar projects
and we used this information to evaluate our case.
c) Experiential knowledge: Risks obtained from group members who have had
some experience in relating projects.

MSc Thesis 119

The risks were identified and categorised into the following classes:

a) Business Risks;
b) Transportation Risks;
c) Installation Risks;
d) Market Risks;
e) Post Installation Risks;
f) Other Risks;

Business Risks

The business risks are the risks that are related to the organisation of the company
on financial terms, procurement, employee management, marketing and public
relations.

Transportation Risks

These are the risks that are associated with the transportation of inventory and
equipment during shipping, stocking, and installation processes.

Installation Risks

These risks are associated with the installation of solar systems and every other
phenomenon associated with the process from the moment the installation teams
depart from the warehouse till the installation is completed. This includes policies
and permissions.

Market Risks

One thing that is always a strong factor to be considered in every business is the
market. Like in all things, there are risks associated with the market. Such risks
include uncertainties associated with the target market, competition, etc.

Post Installation Risks

These are risks that would occur after installations have been completed. They may
be malfunctioning of the systems or risks caused as a result of installation.

MSc Thesis 120

Other Risks

There can be several risks associated with solar systems of this kind which may
have not been identified under the listed sections. Risks of this kind are caused by
natural factors or other social and environmental factors that may not be directly
originated by project loopholes. Below are examples of such risks:

 Weather and Climate effects;

 Theft and sabotage;
 Natural disasters;
 Table showing a list of the identified risks is given in Appendix H1.

8.2.2 Risk Analysis

This is an activity that assesses the probabilities and impacts of identified risks of a
project taking into account every factor that affects the project directly and indirectly
(Ruleworks.co.uk, n.d.).

Risk assessment was carried and a risk profile was created highlighting the
probabilities and impacts on the project in terms of cost, time and quality. A risk
register was also created to adequately document and present risks.

The following figure is a risk assessment matrix having a profile of the risks
according to their probabilities and impacts:

MSc Thesis 121

Figure ‎8-2: Risk Assessment Matrix
The method of portraying the risk assessment that is presented in figure 8-2 was
derived from CGE Risk Management Solutions (2015). It can be seen that the risks
which are identified with numbers are analysed showing their probabilities and
impacts on the project. See Appendix H-2 for a more detailed risk assessment
profile.

The area coloured with thick green represent low probability and impact which
indicates that the risks placed in the area are of low probability and impact.
Invariably, it does not pose much threat to the project even if there are no response
measures carried out to checkmate them.

Also, the risks placed in the area with the lighter shade of green are the moderately
low risks. These set of risks have moderate possibilities of occurring and would not
have high negative impact on the project, but require careful assessments in order to
remain within tolerance.

MSc Thesis 122

The area coloured with yellow have risks which are averagely high in probability and
impact. They also require careful response as they could have considerably high
impact on the project.

The risks found within the area shaded in red are the risks with very high probability
and impact. These risks if they occurred, would impact the project greatly. They
require immediate response before any other operations can be continued. Another
thing to note is that there is a thick line demarcating the yellow and red section. This
line‎is‎called‎a‎‘Risk‎Tolerance‎Line’‎and‎it‎is‎a‎graphical‎depiction‎of‎determining‎
risks that are beyond the risk appetite of the project.

Risk Appetite is the amount of risk that a project is prepared to accept in the course
of achieving its set objectives (Rittenberg & Martens, 2012)

8.2.3 Risk Responses

At every given time whether it is pre-planning, planning, doing, or post project phase;
adequate measures to respond and control risks must be in place in order to
checkmate risks. There are several measures that could be implemented in order to
manage risks effectively to achieve project success.

The main risk countermeasures are listed below as suggested by the Prince2 Primer
(2014):

Reduce: Such measures are taken to either reduce the probability of risks or to
reduce the impact of risks in case they occur. In this case, the project will have to be
planned in such a way that reduces the possibilities of risks. The reduction method
does not full eliminate the risk but only mitigates it.

Prevent: With this countermeasure the project is planned in order to avoid

corresponding risks to make sure that the threat does not have any impact on the
project.

Accept: In a situation where the impact of the risks are bearable and can be
managed within tolerance limit, the risks are allowed to occur and all contingency to
be‎put‎in‎place‎if‎necessary.‎Prince2‎refers‎to‎this‎as‎the‎“Take‎no‎action‎option”.‎

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Equally, this may be applicable even in situations where it is not possible to eliminate
the risk but the project can live with it.

Transfer: This option entails transferring all responsibilities to a third party; it is

mostly done through insurances or contract agreements. Insurance would cover the
consequences caused by the occurrence of the risk. In terms of contract agreement,
there would be clauses that protect the interest of the project should such a risk
occur.

Exploit: This is where a positive risk, opportunity, is identified and exploited.

Below is a table highlighting the control measures for the identified risks.

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Table 8-‎8-1: Risk Control Measures

Category Measure Actions Measure Type

Business Risks Insurance Transfer

Contracts and Agreements Prevent/Reduce/Share

Quality Assurance and Warranty Transfer

Transportation Risks Insurance Transfer

Installation Risks Insurance Transfer

Strict Health and safety Prevent/Reduce

measures according to the
HASAWA 1974

Adequate Equipment Prevent

Assessment (Check)

Market Risks Adequate Marketing and Prevent

Promotion

Special Offers for Clients Prevent

Research Exploit

Post Installation Performance Quality assurance Transfer

and Warranty

Other Insurance Transfer

The above identified risks and control measures are continuously monitored.
However, there are basic prevention measures which must have to be carried out of
necessity and may also be legal requirements in business processes. They are listed
and highlighted below:

 Insurance;
 Legal Agreements and Contracts;

MSc Thesis 125

  Special Offers;
 Product Performance Warranty (Supplier);
 Quality Assurance;
 Equipment Assessment;
 Health and Safety Measures;

These are required to be in place because they play very important roles in the
lifecycle of a business or project in terms of losses, conflicts and product quality.

These risk preventive control measures which have been identified are very vital to
the project as they will not only reduce costs, but will also create and maintain civil
accord between various parties involved. They also provide assurance of positive
operations all resulting in a much better financial position than if they were not
implemented.

Insurance:

According‎to‎Lloyd’s (2015),‎“Insurance‎is‎the‎main‎way‎individuals‎and‎businesses‎
reduce‎financial‎impacts‎of‎risks”.‎In‎every‎business‎there‎are‎bound‎to‎be‎
uncertainties of events and the negative uncertainties would incur extra expenses.
The impact of negative outcomes may have impact on time, cost or quality; therefore
having insurance on the business would take away these risks.

A certain organisation provides insurance for another business by taking over the
risks of the business in return of a stipulated fee. Both parties thereby go into an
agreement‎called‎‘Insurance‎Contract’‎or‎‘Policy’.‎

Global Solar Systems will also implement the business tradition of insuring every
possible risk in the business. Also, according to Trusted Choice (2015) there are
several insurances that are needed by almost every firm and they are listed below:

 General Liability Insurance;

 Property Insurance;
 Commercial Auto Insurance;
 Workers Compensation;
 Directors and Officers Insurance;
 Date Breach Coverage;
 Business Umbrella Policy;

MSc Thesis 126

There are however several other insurance policies that companies use or
combination of policies that suit the nature of business they run.

Global Solar Systems will implement a generalised insurance scheme for companies
in the renewable energy industry. This will cover all risks relating to: the
organisational management of the company, damages, loss and theft of solar
panels, inverters and other components including other equipment and resources for
installation. Also, combinations of policies (bundles) mostly come along with
discounts;‎these‎bundles‎are‎also‎called‎Business‎Owner’s‎Policies‎(BOP) (Trusted
Choice, 2015).

Generally, insurance covering general needs of a Solar PV installation company

starts from £250 per annum and this varies according to the size of company; the
degree of its operations; also the nature and number of policies implemented
(Northern Alliance Brokers, 2015).

The total insurance costs that Global Solar Systems is going to incur will amount to
the‎sum‎of‎£1,200‎per‎annum.‎This‎covers‎employer’s‎liability,‎material‎damage and
business interruptions.

Contracts and Agreements

A business contract is a legally binding written agreement between multiple business

parties allowing or restricting corresponding parties to carry out certain action
(Government of Western Australia, 2015). However, there are various forms of
contracts a company could go into as explained by Gregory Hamel (2015).
Highlighted below are the specific contracts relevant to our business:

Leases: This form of contract is an agreement between a landlord and a tenant

which‎defines‎terms‎under‎which‎the‎tenant‎is‎allowed‎to‎use‎the‎landlord’s‎property.‎
Such properties are mostly office spaces, store spaces, warehouses, production
facilities, etc. The importance of this contract is to maintain a mutual accord between
both parties. GSS will enter into a long lease for the premises to avoid instabilities;
this lease will run for a period of five years.

Employment Contracts: This kind of contract is between an employer and an

employee; it defines employment terms which specify wages and benefits, job

MSc Thesis 127

descriptions and other interests. It is important to have this kind of agreement in
order to provide more certainty in the fulfilment of the responsibilities of both parties.
We will have a contract where employees, particularly the installation teams, will only
be paid for hours and days worked.

Also, the importance of contracts and their implementation goes beyond leases and
employments. Osmond Vitez (2015) presented some facts about contracts as
explained below.

Business‎contracts‎are‎often‎used‎as‎tools‎that‎secure‎a‎company’s‎resources;‎these‎
contracts involve negotiations and depending on the nature of the terms the
negotiations may last for days, weeks or as the case may be. They always have
legal consequences if any party eventually breaks agreement; they can also be
amended in any case where both parties may have mutual benefits from the
changes to be made.

Furthermore, Vitez (2015) highlighted some other forms of contracts which are
suitable for this business and they are presented below.

Limit Obligations: Such contracts specify business responsibilities between

companies. A typical example is for a company that offers certain services like
maintenance and technical support. They contain information about service charges
and frequency of services provided. This can happen in a business to individual
context or a business to business relationship.

Non-Compete Agreements: A contract can be used to invoke a Non-Compete

Agreement between businesses or between companies and ex-employees. These
contracts create market boundaries between companies with mutual interests. It
allows companies to have some form of uniqueness and provide specialised
business services. Furthermore, this can be used to restrict former employees
having‎knowledge‎of‎a‎company’s‎strategic‎information‎from‎making‎use‎of‎such‎
information to make profit independent of the company.

Finally, contracts contain delicate and important information which also includes
legal terms and it is important for a company or individual to consult professional
guidance. A legal expert can provide better information and interpretation of such
agreements and advice on the best course of action in order to achieve the

MSc Thesis 128

maximum benefit out of such agreements (Vitez, 2015). GSS will utilise the
professional service of other companies in making decisions.

Special Offers

Special offers are countermeasures that are aimed at winning over customers and
gaining more market control. Making special offers to potential customers is a
preventive step for risk control. There are special offers like providing free extra
services like maintenance for a period of time. Our customers will have free
maintenance the first year and thereafter have a negotiated maintenance contract for
a period of five years. Also there will be Third-Party Loans for customers who may
not be able to purchase the installed systems after the one year contract period. See
section 5 for contracts.

The aforementioned offers are all measures to be put in place in order to prevent the
risk of Low Demand resulting in fewer customers and low turnover. This is in effect a
prevention measure against competition risk.

Product Performance Warranties:

A warranty is a promise that gives an assurance by a certain party to another that

specific facts are true (Hogg, 2011). In this case a company provides assurance that
the client will not suffer any losses due to questionable quality of its products or
services and depending on the nature of transaction; there are different clauses that
can be defined in a warranty which may be free replacements, free repairs or free
services as the case may be.

Global Solar Systems will obtain performance warranties from the producers of solar
panels, inverters and other installation components in order to be assured of
operating on less risk in the business. We will in turn provide assurance to our
customers that should performance suffer the first year, this will be remedied free of
charge.

Quality Assurance:

The term quality can be viewed from different perspectives and can be described in
different ways. Quality, from our business perspective, is‎a‎“totality‎of‎characteristics‎
which‎act‎to‎satisfy‎a‎need”‎(Lifetime).‎The‎quality‎solar‎panel‎installations‎on‎any‎

MSc Thesis 129

rooftop is vital because this affects the public image of a company, affects the
market‎demand‎for‎the‎company’s‎services and may also lead to law suits.

However, good quality not only creates good impression of the company, it also
indirectly acts as a marketing tool as already existing clients tend to act through
‘word‎of‎mouth’.‎According‎to‎Kimberly‎Whitler (2014), word of mouth is the most
important form of marketing.

There are various ways by which a company can implement quality assurance in its
operations and business. But there are also several factors to be considered and
addressed before any form of quality assurance measures are taken. These factors
are listed below.

Component Warranty: Every one of our primary components (Panels, Isolators,

Inverters and cables) have a warranty from the suppliers (Manufacturers) covering
any Manufacture Defects over a period of time.

Trained Installation Technicians: Every client would want their services to be done
by duly trained experts and they can only be comfortable with a contract if they are
assured of being served by qualified experts. We employee only qualified labour that
has over five years of experience to ensure that quality is maintained.

Installation Guaranty/ Warranty: This is something that can be done in order to give
clients some assurance on installations. Warranties can be created after considering
several factors in order to suit both the company and clients.

Test and commissioning: Every installation is tested and commissioned by a

qualified technician from our teams. The parameters are recorded and form part of a
handover package. Where there is a deviation from normal values, this will be fixed
prior to handover.

Microgeneration Certification Scheme: However, the solar panel industry in the

UK has several stakeholders one of which is the MCS agency. The MCS
(Microgeneration Certification Scheme) is a quality assurance scheme that certifies
microgeneration technologies that are used in producing electricity and heat from
renewable sources (MCS, 2015). This certification is also a requirement for Feed-in
Tariffs eligibility. Also, there are certain criteria and requirements to be met prior to

MSc Thesis 130

obtaining a MCS certification some of which have been identified under product
installation. Basically, being a MCS certified company is sufficient quality assurance
and our company will be accredited to this.

Equipment Assessment and Maintenance

Every equipment used during the installation process will be well assessed in order
to achieve maximum performance quality. Adequate maintenance will be done as
often as necessary as well.

All these activities are meant to prevent any low quality performance of equipment
and to prevent malfunctions that may disrupt or affect the normal installation
schedule which may possibly lead to additional expenses for the company.

Health and Safety Measures

Installations will involve working at heights which carry a risk both to employees and
the public. These activities require adequate safety measures and the UK
government has a legislation concerning such work which can be found in the Health
and Safety at Work Act of 1974 (HASAWA). These legislations clearly states good
working practices in order to maintain a safe working environment for people.

Our workers will have certification in working at heights. They also have provisions
for Personal Protective Equipment (PPE) which will be available and mandatory for
installation workers to wear. Skill Technicians will have Fist Aid training and First Aid
boxes will be available during installation and at the office. These measures are put
in place for safety purposes and to meet the requirements in the HASAWA.

8.2.4 Risk Monitoring

This is a process that keeps track of risks that have been identified, identification of
new risks, executing response measures and carrying out continuous evaluation of
all risks throughout the project (My PMPS, 2009).

Every project encounters new risks during the course of its lifecycle and it is
recommended that the risks are properly managed. This project will not be an
exception as adequate actions will be taken to ensure that proper monitoring and
control of the risks are done. The process may involve other risk management
processes‎but‎will‎be‎done‎as‎suggested‎by‎Lloyd’s (2015) and is listed below.

MSc Thesis 131

Monitor Changes in Risk Environment: During the course of the normal business
operations, risks will have to be constantly checked in order to maintain control of all
elements relating to risks.

Report Key Risk Information: Adequate reporting of changes to the risk information
to the appropriate individuals is mandatory. These individuals responsible for such
risks‎are‎known‎as‎“risk‎owners”.‎This‎will‎be‎carried‎out‎by‎anybody‎who‎identifies‎
these changes. It may be a risk management team, any other employee or
stakeholder.

The risk monitoring is followed or accompanied by the adoption of a new cycle of the
Risk Management process.

8.3 Risk Budget and Contingency

Since risks are uncertain, it is wise to consider the possibility of their occurrence and
determine a budget for the risks if they occur. This project mostly has risks with low
probability but there will however be a contingency amount set aside to cover the
risks that have direct impact on the finances of the business. (See Appendix H-3)

Once the project is operational, such a budget for the risk will comprise of the
following;

Insurance Costs:

The insurance cost as indicated above is £1,200 per annum.

General Contingency:

According to Gerald Hanks (2015), a contingency account or fund is money set aside
to address unanticipated circumstances or losses in a business. This amount will
consist of the extra funds that were calculated for the risk costs. (See Appendix H-4)
The table below highlights the figures;

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Table ‎8-2: Risk Contingency

Risks Amount (£)

Labour Cost Increment £16,144
Damaged Components £584
Logistics Cost Increment £9,743
Solar Panel Cost Increment £3,870
Repair of Damaged Customer Property £700
Fire outbreak restoration £632
Total £31,673

From the table above, it is convenient to have a contingency account of £30,000 to

cover any unforeseen issues.

The risk budget however will be a sum of the insurance costs and the contingency
fund. The table below presents those figures.

Table ‎8-3: Risk Budget

Insurance Costs £1,200

Contingency Fund £30,000
Total Risk Budget £31,200

8.4 Competition Risks

Competition is a very important factor in this business because they pose a threat to
company’s‎reach‎on‎clientele and therefore are identified a risk factors.

A competitive or competitive company is where several companies or individuals

provide similar products or services targeted at the same group of customers
(Business Case Studies, 2015). This risk factor is vital in the sense that business
success depends on the ability for competitive companies to acquire certain share of
the market.

The target market of Global Solar Systems is within the South and South East
England and competitors are identified as companies who install Photovoltaic Solar
Systems on residential roofs within the target market.

MSc Thesis 133

8.4.1 Competition Analysis
There‎are‎various‎ways‎of‎analysing‎competition‎in‎a‎business‎and‎the‎‘Porter’s‎5‎
Forces’‎has‎been‎used‎to‎carry‎out this analysis.

‘Porter’s‎5‎Forces’‎identifies‎5‎vital‎factors‎(Free-management-ebooks.com, 2013)
that require adequate analysis and addressing in order to create a business
environment with less or no market risks.

The porter’s‎five‎forces‎are:

 Competitive Rivalry;
 Threat of New Market Entrants;
 Threat of Substitutes;
 Bargaining Power of Suppliers;
 Bargaining Power of Customers;

Competitive Rivalry: This concept identifies key competitors in the market and how
to coordinate business in order to attain top spot in the market share.

This factor is important because winning over the majority of the customers is a
prime goal of every business. Therefore certain actions (steps) will be taken to
achieve the desired outcome.

 Identification: Key competitors have been identified in the preceding chapter.

 Actions: Controlling risk by competitors

Threat of New Market Entrants: Every business is threatened by new competitors

entering the market. This is because new companies always endeavour to provide
innovative or cheaper services. These new entrants may have a strong impact on
the market giving a strong competition to already existing companies.

Global Solar Systems is a new entrant to the market and will need to take the
necessary measures to survive in the new environment. We will therefore endeavour
to emerge with great services, good quality and less cost in order to gain market
share and in good proximity.

Threat of Substitutes: The possibility of having a substitute for any product or

service of a business is a threat to the business. There are various ways of

MSc Thesis 134

generating electricity which includes the use of fossil fuels, large hydro-electric
generation, nuclear, and renewable energy (World Nuclear Association, 2015).

Solar Electricity is renewable energy and also has no greenhouse gas emissions
during power generation and only produces a small carbon footprint throughout its
lifecycle (World Nuclear Association, 2015). However there are other ways of
generating electricity from renewable energy which includes wind and small scale
hydro systems. Also, there are different ways of generating electricity using solar
energy. These technologies are expensive but in order to promote green energy,
several governments provide subsidies to enable individuals and organisations run
solar electricity at cheaper rates.

This evidently has made solar electricity advantageous as it is affordable and

promotes green energy which is eco-friendly.

Bargaining Power of Suppliers: Suppliers tend to be very influential when there is

no competition on their level. However, there are various Solar panel suppliers in the
UK (Thomas, 2015) and this places us in an advantaged position as the supplier
power cannot be a determinant factor in the business. Our product will be
differentiated by the services we offer.

Bargaining Power of Customers: The customers are a very important part of any
market and therefore should be considered thoroughly. The‎customers’‎influence‎on‎
costs is higher when there are very few of them in the market or there are a high
number of sellers (Arline, 2015). However, providing the best services to customers
at the cheapest cost (while making profit) is the goal and also not letting the
customers’‎power‎to direct‎and‎affect‎the‎company’s‎finances‎negatively.‎The‎
company will however take steps in order to provide customers with optimal
services.

Strategies:‎The‎Porter’s‎forces have been very instrumental in the implementation of

several strategies which include two of his suggestions and are presented below:

Cost Leadership: This entails the business to reduce costs of products and services
while still within the standard prices of the industry. And Global Solar Systems have
been able to provide monocrystalline panel for lower prices while making profit. This
will help us to gain customer trust and loyalty.

MSc Thesis 135

Focus: This strategy requires a company to place its focus on a specific element of
a market that best suits its interests. This requires good understanding of the market
and every determining factor that affect business positively and negatively. To this
effect, Global Solar Systems is focusing on the South and South East of England as
presented under marketing analysis.

Differentiation:‎The‎third‎strategy‎given‎by‎Michael‎Porter‎is‎called‎‘Differentiation’.‎
Using this strategy, a company creates uniqueness in its services. This involves
providing a different product or service to the market which boosts their market
value. Or find a different way of delivering the same products or services in order to
gain more market share (Arline, 2015).

8.4.2 Controlling Risks Posed by Competitors

This section highlights measures to be taken in order to control the risks posed by
market competition and are listed as follows:

Providing Better Quality for Less Cost

Global Solar Systems provide customers with Monocrystalline PV Solar Panels

which are the most efficient and most expensive at a cheaper price. This is offered at
an economically cheaper rate when all factors have been considered. The factors
being electricity production efficiency and longevity of the systems coupled with extra
customer-centric benefits. The customers will be offered free maintenance for the
first year after panels have been sold over to them a negotiated contract.

Providing Clients with Third Party Offers

Every customer who may not be able to afford to buy the solar system after one
year, as required in the contract, will be offered a chance to obtain loan from a third
party firm which will pay off the cost and manage the loan with the client. These
loans can be paid over a designated period of time as agreed by the clients and the
third party organisation.

Strategic Marketing Techniques

Marketing is an important element in any business that can make a huge difference if
it fulfils its intended purpose. Therefore in the intent of acquiring as much market

MSc Thesis 136

share over competitors, it is important to apply strategic techniques to achieve set
goals.

A workshop was conducted for the purpose of strategizing marketing options with
consideration of some vital factors like what is the target market, when to
commence, by what means and budget for marketing.

8.4.3 Project Failure due to Competitors Advancement

Realistically, there is always a risk of being outwitted on the market by competition
companies due to uncontrollable circumstances. A business may fail at any point in
time and backup options have been outlined as an exit option or to curtail the impact
should it occur. Below is a list of options outlined as exit plans in unlikely event that
any misfortunes may happen:

 Switching from installers to distributors of PV solar panels to other installers;

 Allow Third party companies to give loans to our clients so that we do not lose
out;
 Sell over all remaining panels to competitors as a reasonably cheaper rate;
 Partnering with another company in order to remain in business;

MSc Thesis 137

Chapter 9 Financial Analysis

[Abel Kimbinyi]

9.2 Return on Investment

Return on Investment (ROI) is a measure used that is commonly used to analyse the
efficiency of an investment or to compare different projects so as to come up with the
best investment option.

ROI measures the amount of return on an investment compared to the cost of

investment. ROI, is calculated by the return on a project divided by the cost of the
investment; expressing the result as a ratio or percentage.

𝑮𝒂𝒊𝒏 𝒐𝒇 𝑰𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕−𝑪𝒐𝒔𝒕 𝒐𝒇 𝑰𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕

𝑹𝑶𝑰 = ……………….‎‎‎Equation ‎9-1
𝑪𝒐𝒔𝒕 𝒐𝒇 𝑰𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕

28092566.47−18433758.84
𝑅𝑂𝐼 = 18433758.84

= 0.52 = 52%

Using the profitability calculation in equation 9-1, it can be demonstrated that the
project yields a staggering 52%.

9.3 Payback Period

Payback period is the amount of time required to reimburse an investment cost. In
this project it is very clear that the payback period is three years, including a
financing cost associated with initial investment (see table 9-1).

MSc Thesis 138

Table ‎9-1: Payback Period

Estimated Net Income Over 5 years

Loan Amount:
£4,000,000

Year Amount (£) Cumulative

1 143,145.00 143,145.00

2 1,931,401.00 2,074,546.00

3 1,931,401.00 4,005,947.00

4 1,931,401.00 5,937,348.00

5 1,931,401.00 7,868,749.00

Payback= 3
Years

Total 7,868,749.00

MSc Thesis 139

9.4 Present Value Analysis
In the previous analysis we used payback method, however, payback does not take
into account the true value of the future value of money. Using present value at 11%
(Table 9-2), we can see that by the end of five years the project will have a
£1,527,243.27 above investment cost.

Table ‎9-2: Present Value Table

Cost of capital at 11%

Year Amount (£) PV Cumulative

0 - 4,000,000.00

1 143,145.00 128,973.65

2 1,931,401.00 1,568,297.61

3 1,931,402.00 1,411,854.86

4 1,931,403.00 1,272,794.58

5 1,931,404.00 1,145,322.57

Total 1,527,243.27

MSc Thesis 140

9.5 Projected Profit and Loss
Figure 9-2 shows that there will be a loss of £3,695,568.87 in the first year due to the
fact that the cost of operations (including wages) would be paid despite no significant
returns.

However, from the second year onwards the company will see a significant return of
£1,931,914.13 annually.

8,000,000.00

6,000,000.00

4,000,000.00

2,000,000.00 Total Revenue

Cost of Sales

- Gross Profit
Year 1 Year 2 Year 3 Year 4 Year 5

-2,000,000.00

-4,000,000.00

-6,000,000.00

Figure ‎9-1: Annual Projected Profit and Loss

MSc Thesis 141

9.6 Cumulative Annual Revenues and Cost of Sales
Figure 9-2 Show the annual cumulative gross revenues and cost of sales over the
period of five years.

25,000,000.00

20,000,000.00

15,000,000.00

10,000,000.00
Cumulative Total Revenue
CumulativeCost of Sales
Cumulative Gross Profit
5,000,000.00

-
Year 1 Year 2 Year 3 Year 4 Year 5

-5,000,000.00

-10,000,000.00

Figure ‎9-2: Cumulative Profit and Loss over 5 Years

MSc Thesis 142

9.7 Annualised Revenue and Cost of Sales
When the revenues are annualised over five years, it can be clearly seen that the
project is profitable and healthy. This is clearly presented in figure 9-3 which shows a
first year dip and thereafter conscious positive returns.

8,000,000.00

6,000,000.00

4,000,000.00

Total Revenue
2,000,000.00
Cost of Sales
Gross Profit
-
Profit After Tax
Year 1 Year 2 Year 3 Year 4 Year 5

-2,000,000.00

-4,000,000.00

-6,000,000.00

Figure ‎9-3: Annualised Costs

MSc Thesis 143

Chapter 10 Conclusion

[Abel Kimbinyi]

This project analysis has been based on sound professional assessment and the
facts carefully presented. It can be seen that based on the assumptions presented in
the report, total revenue of £22,466,566.00 would be generated over five years. Total
cost of sales of £18,433,758.00 will accumulate in the intervening period giving a
gross profit of £4,032,807.63. This amount reduces to £2,487,132.33 as cumulative
profit after tax.

Despite having the net profit of £2,487,132.33 at the end of five years, we also have
net assets worthy of £4,500,800.00 (Gross £5,626,000.00) making a total of
£6,987,932.33.

Table ‎10-1: Assets in Year 5

Year 5 Assets

Outstanding Installations £5,616,000.00

Motor Vehicles £4,000.00
Office Equipment £2,000.00
Others/Panels £4,000.00

£5,626,000.00

It can be seen that this is a viable business proposal that has the capacity to
generate good return on investment. A ROI of 52% is considered health in terms of
investment particularly when most businesses are still recovering from recession.

The financial accounting statements are attached in appendices I-1 to I-5 for five
years summary detail calculations of how our business can perform. This is a base
case that outlines that there is a sound financial proposal for this business strategy.

The following are the highlights:

 Initial investment of £4,000,000.00 will fund 1,248 installations a year (based

on the medium consumption assessment).
 The financing includes a £143,145.00 as initial cost of financing.

MSc Thesis 144

  The project operates a near cost neutral warehouse facility through the use of
shipping containers.
 The cash flow from year two and three will eliminate the debt instrument
sharply.
 The financial plan rest little reliance on generation tariff as it is negligible in the
large scheme of things

10.2 Compound Interest of Investing in a high yield (5%)

If the same amount was invested in a high yield bond of 5%, it would yield the results
presented in the figure. It can be seen that this is far inferior to our business
investment.

Compound Interest
£350,000.00

£300,000.00

£250,000.00

£200,000.00

£150,000.00 Interest

£100,000.00

£50,000.00

£-
1 2 3 4 5

Figure ‎10-1:: High Yield Gross Compound Interest

Figure 10-2, clearly compares the interest gained from a 5% bond to that obtained by
the project. In the first year the bond would do better but there after the project
outwits the bind investment.

MSc Thesis 145

 Comparison of Interests
£3,000,000.00

£2,000,000.00

£1,000,000.00

£0.00
Year 1 Year 2 Year 3 Year 4 Year 5

(£1,000,000.00)

(£2,000,000.00)

(£3,000,000.00)

(£4,000,000.00)

Interest (Bond) Gross Profit (Project)

Figure ‎10-2: Comparison of Interest

MSc Thesis 146

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MSc Thesis 168

 Appendices
Appendix A Introduction

A-1 Management Gantt Chart

Figure A-1: Management Gantt Chart

MSc Thesis 169

A-2 Pay Roll

Table A-1: Pay Roll

MSc Thesis 170

A-3 Cost of standard Installation

Table A-2: Cost of Standard Installation

MSc Thesis 171

Appendix B Business Summary
B-1 Organisation Structure

Group B Installations

General
Manager

Installation Office Accounts

Manager Manager Manager

Team Leader

Skilled Tech A Skilled Tech B Skilled Tech C Unskilled A Unskilled B Unskilled C

X2 X2 X2 X4 X4 X4

Figure B-1: Organisation Structure

MSc Thesis 172

Appendix C Organisation Structure
C-1 Company Logo

Figure ‎10C-1: Company Logo

Company‎Name:‎“Global‎Solar‎Systems”

The idea behind the‎name‎is‎to‎give‎a‎synergy‎between‎“global”‎representing‎the‎

world wide strategy. “Solar”‎representing‎the photovoltaic power‎and‎“systems”‎
represent a complete working system.

Logo has been carefully chosen to be green so as to attract our customers to green
energy. This is very essential for an organisation as it allows the company to brand
image.

MSc Thesis 173

C-2 Website Domain
Our domain is available and registered which cab checked at the following:
www.gsolar.co.uk

Figure C-2: Website Domain

C-3 Fiat Doblo Cargo Quotation

Figure C-3: Fiat Doblo Cargo Quotation

MSc Thesis 174

C-4 Fiat Doblo Cargo Quotation

Figure ‎10C-4: Fiat Doblo Cargo Quotation

C-5 Citroen Berlingo Enterprise Van Quotation

Figure C-5: Citroen Berlingo Enterprise Van Quotation

MSc Thesis 175

C-6 Berlingo Diesel Quotation

Figure ‎10C-6: Berlingo Diesel Quotation

C-7 Office Printer

Figure ‎10C-7: Office Printer

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C-8 Executive Chair

Figure C-8: Executive Chair

C-9 Executive Desk

Figure ‎10C-9: Executive Desk

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C-10 Office Chair

Figure ‎10C-10: Office Chair

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C-11 Sofa

Figure C-11: Sofa

C-12 Reception Table

Figure C-12: Reception Table

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Appendix D Product and Systems Descriptions
D-1 Types of Solar Cell

Solar Cells:
Solar cells are the electrical components of the panels which convert the solar
energy into electricity that can be used to power the household devices. They have
semiconducting qualities which pumps the electron and turn them into electricity
when the sunlight falls on them. They are commonly known as Photovoltaic Cells.

There are many types of solar cells but the most commonly used cells are the ones
which are made by:

 Crystalline Silicon.
 Thin Film Technology

Crystalline Silicon Solar Cells:

About 90% of solar panels in the market today are made up of crystalline silicon
solar cells (Alternative energy, 2015). Since the silicon molecule has greater purity,
the efficiency of converting sunlight into electricity is more. It has greater purity
because the molecules are aligned perfectly. There are two common types of
crystalline silicon cells:

 Monocrystalline
 Polycrystalline

Monocrystalline Solar Cells:

They are made from a pure single crystalline silicon bars and hence they are also
known as single crystalline solar cells. The entire molecules in the cell are aligned in
one direction which results in high efficiency of the panel. It made from silicon ingots
which are cylindrical in shape whose edges are cut to make a silicon wafer which is
octagonal in shape to optimize its performance. So there are small amount of
unused place when lot of cells are merged to form a solar module. The size of the
monocrystalline module is smaller than the polycrystalline module of equal capacity.

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They are more expensive than polycrystalline because the cost for producing a
silicon wafer is high when compared to polycrystalline (c-changes, 2015).

Figure D-1: Monocrystalline Solar Cells

Source: (c-changes, 2015)

Polycrystalline Solar Cells:

Polycrystalline panels are made from several parts of pure crystal. The cell is form
by silicon offcuts which are merged to form a block. The molecules are not perfectly
aligned in the cells, and because of it there are many loose joints which affect the
efficiency. They are also known as Multicrystalline Solar Cells. They have lower
tolerance to heat which means their performance is not appreciable during high
temperature. The silicon wafer in polycrystalline is rectangular in shape.

Figure D-2: polycrystalline solar cell

Source: (c-changes, 2015)

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Thin Film Solar Cells:
Thin film solar cells are generally made from single or several thin layer of
photovoltaic materials such as amorphous silicon, cadmium telluride, copper indium
gallium selenide, organic photovoltaic cells. The major problem with thin panels is
that they occupy huge amount of space. They have high temperature resistance so
the efficiency is not affected by heat. They have a shorter life period when compared
to the crystalline panels. And also they are less efficient than the crystalline panels.
Since they have high heat resistance and have less impact of shading, the market
for thin film panels is growing. Also, researchers believe that there will be increased
efficiency in the coming models (Alternative energy, 2015).

Figure D-3: Thin film

Source: (Fabricalo, 2014)

Hybrid panels:
They are made through the combination of both crystalline and thin film cells. The
thin layers of amorphous solar cells are merge behind the monocrystalline cells to
form hybrid panels. The cost of hybrid panels are much expensive when compared
to mono or polycrystalline panels. The reason for having a thin layer of amorphous
behind monocrystalline cell is to make the panel more efficient even in low light
condition. They occupy less space in the roof but produce more power when
compared to other panels.

Efficiency:
Efficiency is the commonly used term to compare the performance rate of one solar
cell with another. It is defined as the ratio of output power by a solar cell to the input
energy produced by the daylight (PV education, 2013). The efficiency also depends
on the intensity and the spectrum of the daylight and the solar cell temperature.

MSc Thesis 182

The solar cell efficiency according to PV Education (2013), can be calculated by:

Pmax=Voc*Isc*FF

𝑉𝑜𝑐∗𝐼𝑠𝑐∗𝐹𝐹
Ƞ= 𝑃𝑖𝑛

Where,

Voc- open circuit voltage

Isc- short circuit current

FF-fill factor

Ƞ- efficiency

MSc Thesis 183

D-2 Colour codes and applications for Insulation
The insulation for the wires is coded with colours to designate its purpose. These
codes are useful during maintenance works and troubleshooting. The codes are
different for AC and DC cables. They are listed below as outlined by CIVICsolar
(2015):

Table D-1: Colour Codes for Insulation

Source: (CIVICsolar, 2015)

For better understanding, the tables (NEC ARTICLE: 310, page: 15) which show the
conductor application and insulation are added below:

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Table D-2: Conductor Application and Insulation

Source: (National fire protection association, 2015)

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D-3 Technical data for Solar panels and String Inverter

The technical specification of the panel (Alibaba.com, 2015) is shown below:

Table D-3: Panel Specification

Source: (Alibaba.com, 2015)

Among the different panel models, we are going to use Model ST300 in our system.

The technical specification for the string inverter we are going to use is shown below:

MSc Thesis 186

Table D-4: String Inverter Specification

Source: (Alibaba.com, 2015)

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D-4 Direction and Orientation

Roof and Orientation:

In order to produce maximum output the solar panel should in perfect roof angle and
it should be faced in perfect direction. The below chart show the roof angle and the
direction in which the solar panel facing and there efficiency.

Table D-5: Efficiency Table for Roof Angle and Direction

Source: (SolarPV, 2015)

Table D-5 shows that the panel is 100% efficient when it is placed in south at a roof
angle of 30 to 40 degrees.

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D-5 Wind Loading
The equation as given by Blackmore (2004) to find the wind loading is,

F=qS×Cp,net×Ca×Aref

Where:

qs= is the wind pressure at the height H for the PV installation, which can be
referred from table D-6.

Cp,net= pressure co-efficient of the system.

Ca= factor of safety, normally consider as 1.0.

Aref = area of module exposed to wind.

The table to find the wind pressure with reference to the height in different zone is
mentioned below:

Table D-6: Wind Pressure

Source: (Blackmore, 2004)

The first table shows the values for sites located where the ground slope is less than
5%. The second table shows the values for sites located in hilly areas.

MSc Thesis 189

Pressure Co-efficient:
The pressure co-efficient according to Blackmore (2004) is,

Where the module is > 300 mm from the roof surface:

Cp,net for wind uplift = -0.7

Cp,net for downward pressure = 1.0

Where the module is < 300 mm from the roof surface

Cp,net for wind uplift = -1.3

Cp,net for wind pressure = 1.0

Calculation:
Example‎calculation‎for‎wind‎loading‎as‎derived‎from‎Blackmore’s (2004) formula:

The PV module is mounted 100 mm above the residential roof surface

PV array size 2m x 2 m

The site is in Brighton (Zone II in Figure 4:20)

Building ridge height = 15 m

Site is on level ground Site altitude is 60m above mean sea level

Formula for calculating the wind load,

F =qs*Cp,net*Ca*Aref

The wind pressure qs= 1343 Pa (From Table D-6 for a building 15 m high in zone II
at‎an‎altitude‎≤100m)‎

Cp,net= -1.3 (uplift) and 1.0 (pressure) (using recommended values)

Ca = 1.0

Aref = 2 m x 2 m = 4 m2

F = 1343 x -1.3 x 1.0 x 4.0 = -6,984 N (uplift force) F = 1343 x 1.0 x 1.0 x 4.0 = 5372
N (downwards acting force)

MSc Thesis 190

From the above calculation the uplift force of 6984N and the downward acting force
of 5372N is acting on the solar PV module installed above the roof. So the
photovoltaic array should be fixed in or

MSc Thesis 191

Appendix E Service and Installation Processes
E-1 Definitions and Interpretations
The following terms are defined in details: (Draft backstop power Purchase
agreement, 2014) (EPA, 2015)

Adopter/Supplier Global Solar Systems, a company incorporated in England

Agreement The terms, Summary Commercial Terms and the Schedules.

Authorized Alternative Supplier A registered and qualified supplier of

electricity by National Grid UK which is to act as a third part supplier for the sale of
electricity.

Authority The Office of Gas and Electricity Markets Authority (or any similar or
replacement authority).

Business Day Any day other than a Saturday, Sunday or bank or public holiday
in England and Wales.

Commencement Date The date on which this Agreement is executed by the last
of the Parties hereto.

Consumed Electricity The difference between the Generated Electricity and the
Exported Electricity, expressed in KWh.

Customer Property The‎customer’s‎property‎known as the address set out in

the Summary Commercial Terms,

Distribution Network The electrical distribution system owned and operated by

the DNO.

DNO Any person who is the holder of a license under section 6(1)(c) of the
Electricity Act 1989 to distribute electricity and whose standard conditions of its
license have effect in respect of the geographic area within which the Solar System
is located.

Due Date The date falling thirty (30) days after the date of any invoice issued by
the Supplier to the Customer or the Customer to the Supplier (as applicable) or, if
such date is not a Business Day, the next following Business Day.

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Effective Date The date that the Solar System is approved by the Supplier
following Installation and begins generating electricity for use by the Customer.

Electricity Supply License The Electricity Supply License made pursuant to

the Electricity Act 1989 (as amended or replaced from time to time).

Termination Charge An amount determined in accordance with Schedule 3

(plus VAT if applicable).

Excess The amount of electricity calculated by subtracting the Consumed

Electricity from the Generated Electricity, expressed in kWh.

FIT Agreement an agreement with the FIT Licensee for FIT Payments.

FIT Generator A FIT Generator as defined in Schedule A to Standard Condition

33 of the Electricity Supply License as modified and updated.

FIT Order The Feed-in Tariffs Order 2012 (including any amendments or
modifications to that Order and any similar or equivalent legislation promulgated at
any time).

FIT Scheme The scheme for Feed-In Tariffs introduced in accordance with
sections 41 to 43 of the Energy Act 2008 as set out in Standard Condition 33 of the
Electricity Supply License and the FIT Order.

Generated Electricity The electricity generated by the Solar System (other than
any electricity consumed by the Solar System in connection with its operation), as
measured by the Generation Meter and expressed in kWh.

Generation Meter All or any part of the metering equipment, instrument

transformers (both voltage and current), other measuring equipment and apparatus
used to measure the kWh of Generated Electricity (and which shall at all times form
part of the Solar System).

Generation Payments Payment by the FIT Licensee in respect of electricity

generated by the Solar System.

MSc Thesis 193

Installation The physical installation at the Customer's Property of the Solar
System and any supplementary components and fittings required to render the Solar
System operational.

Lease The lease to be entered into on or around the date of this Agreement
between the Customer (as landlord) and the Adopter (as tenant) in relation to the
area, and the airspace above such area, of the Customer's Property on which the
Solar System shall be installed.

Market Rate The rate (per kWh) at which the Customer would have to pay for
electricity supplied to it through the Distribution Network by the holder of an
Electricity Supply License.

Metering System The Generation Meter and the Export Meter.

Parties The Supplier and the Customer (and "Party" shall be construed
accordingly).

Personnel Any directors, officers, employees, agents, contractors,

subcontractors or professional advisers of a Party or any other member of its Group.

Quarter Each quarter in a calendar year, such quarter ending on either 31

March, 30June, 30 September or 31 December.

Receiving Party The meaning ascribed to it in the definition of Confidential

Information.

Renewable Benefits Any benefits and/or revenues arising as a result of the

Solar System being connected to the Distribution Network and any environmental or
renewable benefits (including FIT Payments, ROC Payments and levy exemption
certificates) relating to the Solar System (including any monetary payments).

Solar System The multiple components comprising the complete Solar System
installed (or tope installed) at the Customer's Property in accordance with the terms
of this Agreement, including but not limited to the cells and modules, mechanical and
electrical connections including inverters, the Generation Meter and Export Meter,
cabling and wiring, switchgear and all associated equipment including mountings

MSc Thesis 194

and means of regulating and/or modifying the Generated Electricity and a scads
system, and all alterations, improvements and additions thereto.

Specification the detailed specification of the Solar System as detailed in

Schedule 1 or as updated from time to time by the Supplier.

Subcontractor A subcontractor to whom the Supplier may subcontract all or a

portion of its obligations under this Agreement, and the suppliers of any materials
and/or services necessary for the Supply.

Supply The generation of the Generated Electricity and the export of the
Exported Electricity.

Year The period of twelve (12) months starting on the Commencement Date
and each consecutive period of twelve (12) months thereafter during the Term and
the shorter period commencing on a day following the end of a Year and ending on
the expiry or termination of this Agreement. (Eyre, 2013)

MSc Thesis 195

E-2 Certificates
This certificate guarantees that all steps of electrical installation like design,
construction and testing are done according to the BS 7671 (IET wiring regulations)
(Electrical installation, 2014). It is a legal requirement in the UK for all electrical
installation work.

Figure E-3:Electrical installation certificate

Source: (BRE, 2014)

MSc Thesis 196

E-3 Installation Symbols and Signs
These signs contain some information on how to use solar panels during installation
and when using the system.

Figure E-2: Installation Symbols and Signs

Source: (BRE, 2014)

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E-4 Technical Information
This Appendix contains some signs and technical information to show fire and
rescue notification. A copy of this sign should be supplied to the customer and
allocate it next to the box.

Figure ‎10E-3: An example for Notice showing technical information on Solar

PV system
Source: (BRE, 2014)

MSc Thesis 198

E-5 MCS Certification
This is an example of a company holding an MCS certificate which shows the exact
MCS certification that our company, Global Solar Systems must have.

Figure E-4: MCS Certificate

Source: (Evo Energy, 2015)

MSc Thesis 199

E-6 RECCC
This is a copy of Renewable Energy Consumer Code Certificate, where our
company should have the same certificate to be able to supply energy in domestic
consumers.

Figure E-5: RECC certificate

Source: (Evo Energy, 2015).

MSc Thesis 200

MCS Requirements
This is a copy of MCS requirements, which our company Global Solar Systems must
have in order to gain an MCS certificate.

Figure ‎10E-6: Requirements for MCS

Source: (MCS accrediation , 2014)

MSc Thesis 201

E-7 Planning Permission
This is a householder application for planning permission for works or listed building.
This is the application where the company can apply in order to gain planning
permission.

Figure E-7: Planning permission application

Source: (Planning Portal, 2015)

MSc Thesis 202

E-8 Site Survey Form
Table E-1: Site Survey Form

Source: (PRELIMINARY SITE SURVEY , 2015)

The reason for this survey form is to empower the company to assess the suitability
of homes to install a PV system and to have the capacity to give a quotation to the
establishment work. A PV System can be introduced on an extensive variety of
properties, however rooftops which are north-bound or intensely shaded won't meet
all requirements for the Low Carbon Building Program Grant.

MSc Thesis 203

Appendix F Market Analysis

F-1 Top Solar PV Markets

According to the 2015 solar league tables (Solar Cell Central, 2015), the United
Kingdom lies in the sixth place in the list of Countries with the highest amount of
Solar PV installations; with China occupying the top place. China is also the country
with the largest amount of solar modules manufactured where seven of the top 10
manufacturing companies are located. The list of countries with the highest amount
of Solar PV installations and the top 10 Solar PV manufacturing companies are
shown in the tables F-1 and F-2 respectively.

Table F-1: Countries with the highest amount of Solar PV installations (GW)

Country 2012 2013 2014

China 3.5 11 10.6
Japan 2 6.9 9.7
United States 3.4 4.8 6.2
Germany 7.6 3.3 1.9
Italy 3.8 1.4 0.5
UK 0.9 1.5 2.3
India 1 1.1 0.6
Australia 0.8 0.7 0.9
France 1.1 0.6 0.9
ROTW 6 6.4 11.4

Total Market 30.1 38.4 45

Source: (Solar Cell Central, 2015)

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Table F-2: Top 10 Solar PV manufacturing companies

Rank Company
1 Trina solar, China
2 Yingli Green, China
3 Canadian solar, China
4 Hanwhasolar, China
5 Jinko Solar, China
6 JA Solar, China
7 Sharp, Japan
8 Renesola, China
9 First solar, USA
10 Kyocera, Japan

Source: (Solar Cell Central, 2015)

F-2 Analysis on Sunshine and Other climate factors

The duration of sunshine diminishes with the expansion of latitude and longitude
(Dougal Burnett, 2014). Therefore the southern part of England receives the highest
amount of sunshine in the whole of the United Kingdom due to its position in the
globe.

Also the coastal regions in the south are expected to receive sunshine for more 1800
hours on average. This can be seen by taking an example of Eastbourne, a town
situated in the South East of England as shown in the figure F-1.

MSc Thesis 205

 Mean Monthly Sunshine at Eastbourne
300
250
Sunshine (Hours)
200
150
100
50
0

Months

Figure F-1: Mean monthly Sunshine at Eastbourne (Hours)

Source: (MET Office, 2015)

It is important to understand the expected amount of sunshine and other climatic

factors which affect the performance of Solar PV system in our market. This is
necessary to analyse and forecast the solar energy performance. Hence the
Sunshine during different seasons of the year has been studied which is shown in
the figure F-2. This information is based on the data collected by the MET office
which gives the average value through 1981-2010 (MET Office, 2015).

A detailed analysis on sunshine at different regions in separate seasons is given in

the table F-3.

MSc Thesis 206

Figure F-2: Average Sunshine in the UK during different seasons (Hours)
Source: (MET Office, 2015)

MSc Thesis 207

Table F-3: Sinshine in different seasons in the United Kingdom

Sunshine in different seasons

Autumn Summer Spring Winter
Region
Actual Anomaly Actual Anomaly Actual Anomaly Actual Anomaly
(hrs) (%) (hrs) (%) (hrs) (%) (hrs) (%)
Northern
251.3 90 575.7 114 410.2 96 165.6 101
England
Southern
295.7 93 673 115 487.4 104 214.2 117
England

East & North

257.1 88 582.2 112 425.8 98 192.9 111
East England

North West
Englnd & 265.2 100 591.8 119 397.4 93 135.5 87
North Wales

Midlands 263.7 90 626.8 116 439.6 101 198.9 118

East Anglia 298.6 92 643.6 116 500 107 229.9 123

South West
England & 307.8 101 674.3 109 463.3 99 180.6 102
South Wales

Scotland 209.6 93 462.8 109 258.8 109 102 79

Northern
267.7 105 480.3 113 365.7 86 147.8 100
Ireland

South East
England & 310 93 710.2 115 528.8 109 214.1 114
Central South

Source: (MET Office, 2015)

Additionally factors that affect the effectiveness of sunshine which includes rainfall,
snowfall, wind speed, vapour pressure, temperature and relative humidity are also
analysed as shown in the figure F-3 given below.

It can be observed in the table F-4 on comparison of climate values at different

regions that the South east of England has the potential to be most productive in
terms of solar energy generation MET office (2015).

MSc Thesis 208

Figure F-3: Annual Average Values for Snowfall, Relative Humidity, Vapour
Pressure, Mean Temperature, Rainfall and Wind Speed (Clockwise)
Source: (MET Office, 2015)

MSc Thesis 209

Table F-4: Regional Annual Climate Values in the UK (Avg values from 1981 –
2010)
Days of Rain > 1
Mean Temperature Sunshine Rainfall Days of Air Frost
mm
Region
Actual Anomaly Actual Anomaly Actual Anomaly Actual Anomaly Actual Anomaly
̊C ‎‎‎̊C (hrs) (%) (mm) (%) (days) (days) (days) (days)
Northern
10 1.1 1418.2 103 1030.1 106 158.5 13.9 29.5 -25.4
England
Southern
11.2 1.1 1689.6 109 960.5 121 147.4 20.7 23.2 -22.8
England

East & North

10 1.1 1477.3 104 831.2 107 141.4 9.9 33.6 -21.2
East England
North West
England & 10 1 1398.8 104 1370.8 104 181.4 16.6 23.2 -29.1
North Wales

Midlands 10.6 1.1 1547 108 920.5 115 151.7 20.4 26.8 -24.9

East Anglia 11.5 1.3 1689.3 108 739.3 118 128.5 13 24.2 -22.6

South West
England & 10.8 1 1644.9 108 1417.9 112 176.7 21.8 18.1 -23.6
South Wales

Scotland 8.5 1.1 1151.1 97 1756.8 112 202.9 14.8 38 -28.9

Northern
9.6 0.7 1268.1 101 1296.6 114 191.1 12.5 26.7 -16.1
Ireland
South East
England &
11.5 1.2 1784.3 110 1041.7 132 149.8 28.2 24.4 -22.7
Central
South

Source: (MET Office, 2015)

MSc Thesis 210

F-3 Climate Stations
The study of climate done by the MET office (2015) is made through the information
collected by various climate stations which is spread all over the country. As shown
in the figure F-4, the southern part of England is filled with climate stations which
allow us to implement our strategies accordingly.

Figure F-4: Climate stations map in the United Kingdom

Source: (MET Office, 2015)

MSc Thesis 211

F-4 Population and Households
A population of more than 60 million people in the United Kingdom (BBC, 2014) has
entailed the country to have a large number of households. The population is spread
all over the country. The table F-5 shows the increase rate of population in different
regions of the country (as of 2014) between 2013 and 2014. It shows that the South
East of England had an increase of 0.9% which is more than the average growth rate
of the whole nation (ONS, 2015).

Also as shown in the table F-6, South East of England has the highest number of
households as seen by the end of 2014. It stands at about 3.6 million. It is closely
followed by its neighbouring regions like London and the East of England which are
our likely expansion regions in the future (GOV.UK, 2015).

Table F-5: Growth rate of Population in the United Kingdom in 2014

Population (in Annual Growth

Region
millions, 2014) Rate (%)

UK 64.6 0.7
North East 2.6 0.3
North West 7.1 0.4
West Midlands 5.7 0.6
Yorks and The Humber 5.4 0.8
London 8.5 0.7
East Midlands 4.6 0.9
East England 6 1.4
South West 5.4 0.9
South East 8.9 0.7
England 54.3 0.8
Wales 3.1 0.4
Scotland 5.3 0.5
Northern Ireland 1.8 0.7

Source: (ONS, 2015)

MSc Thesis 212

Table F-6: Number of Households in different regions of the United Kingdom
(2014)

Total No of
Region
Households (2014)
North East 1,130,600
North West 2,984,200
Yorkshire and The Humber 2,269,500
East Midlands 1,977,300
West Midlands 2,321,400
East England 2,490,300
London 3,220,300
South East 3,608,500
South West 2,260,400
Wales 1,298,300
Scotland 2,413,800
Northern Ireland 728,200
Total number of
26,702,800
households in the UK

Source: (GOV.UK, 2015)

Another relevant information regarding households is that the rise in the number of
households relative to the rise in population until year 2037 is expected to be about
1.5 times as shown in the table F-7. This information provides an assurance for the
company in the long term.

MSc Thesis 213

Table F-7: Comparison between change in households and population

2012 2017 2022 2027 2032 2037

Total Households
22305 23396 24505 25578 26605 27548
(Thousands)
Change in Households
- 1091 2200 3274 4300 5244
(Thousands)
Percentage change in
- 5 10 15 19 24
Households (%)
Total Household
52539 54430 58308 58033 59548 60913
Population (Thousands)
Change in Population
1894 3772 5497 7012 8377
(Thousands)
Percentage change in
4 7 10 13 16
Population (%)

Source: (GOV UK, 2015)

F-5 Analysis on Roofs

Despite a high number of households being spread across the United Kingdom, it
does not represent the number of roofs present. Several households are located
within properties that are set under leaseholds like apartments and flats. The number
of leasehold properties in different regions of England and Wales are shown in the
table F-8. Northern Ireland and Scotland are omitted in this list and the following lists
since they are ineffective markets to focus on. This is done through consideration of
their low number of households, less amount of electricity being used and
unfavourable solar conditions.

MSc Thesis 214

Table F-8: Leasehold properties in different regions of the United Kingdom

Region Leasehold Properties

Wales 180,665

North East 178,522

North West 514,840

West Midlands 385,728

Yorks and The Humber 348,458

London 1,766,777

East Midlands 231,766

East of England 424,034

South West 457,258
South East 788,570

Source: (Carlex, 2014)

Leasehold Properties in England and Wales

2000000
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0

Figure F-5: Leasehold properties in different regions of the United Kingdom

Source: (Carlex, 2014)

MSc Thesis 215

The number of residential roofs and the number of roofs without solar installations is
essential information to building the marketing strategies. Based on the data
obtained on the number of households and leasehold properties, the total number of
roofs is computed by subtracting the latter from the former set of data. The
calculated statistics are given in the table F-9 and shown in the figure F-6.

Table F-9: Number of Roofs in different regions of the United Kingdom

Region Roofs

Wales 1117635
North East 952078
North West 2469360
West Midlands 1935672
Yorks and The Humber 1921042
London 1453523
East Midlands 1745534
East of England 2066266
South West 1803142
South East 2819930

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015)

3000000
Number of Roofs

2500000
2000000
1500000
1000000
500000
0

UK Regions

Figure F-6: Number of Roofs in different regions of the United Kingdom

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015)

MSc Thesis 216

According to the data published by ‘Solar’‎Magazine‎(2015), the number of solar PV
installed roofs per 10,000 homes were given as shown in the table F-10. Hence
using data from the total number of roofs obtained as mentioned earlier, the number
of roofs with and without solar installation was calculated (Table F-11).

Table F-10: Number of Solar PV installations per 10000 homes

Total No of installations
Region
per 10000 homes (2014)

North East 252

North West 178
Yorkshire and The Humber 244
East Midlands 300
West Midlands 194
London 48
South East 213
South West 378
Wales 283
Scotland 159
England 219

Source: (Solar UK, 2015)

MSc Thesis 217

Table F-11: Roofs with and without Solar PV installations

Roofs with Roofs without

Region Solar Solar
Installation Installation

Wales 31629 1086006

North East 23992 928086

North West 43954 2425406

West Midlands 37552 1898120

Yorks and The Humber 46873 1874169

London 6977 1446546

East Midlands 52366 1693168

East England 69728 1996538

South West 68159 1734983
South East 60064 2759866

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015)

The inclination of the roofs and the direction it faces also determine the performance
and effectiveness of the solar panels. Roofs which face between south-west to the
south-east and at an inclination of around 30°- 40° produce the highest amount of
electricity through the solar technology (Figure F-8). Since most of the roofs in the
south eastern region are pitched roofs facing southward direction, the potential
electricity produced in this region through solar power is huge (Renewables Tool Kit,
2014).

MSc Thesis 218

Figure F-8: Annual energy generation for roofs inclined at different angles
from south
Source: (Renewables Tool Kit, 2014)

F-6 Analysis on Electricity generated

Profit through Solar PV can be received by the generation of electricity. Therefore it
is important to know the amount of electricity usage per average household which is
given in the table. It is observed that houses in the South East of England consumed
the highest amount of electricity at 4.4 MWh as shown in the table F-12 (ONS,
2013).

Table F-12: Annual electricity consumption in the United Kingdom (MWh)

Electricity Consumed
Region
annually (MWh)
Wales 3.84
North East 3.53
North West 3.94
West Midlands 4.1
Yorks and The Humber 3.8
London 3.95
East Midlands 4.02
East of England 4.38
South West 4.32
South East 4.41

Source: (ONS, 2013)

MSc Thesis 219
The data shown in table F-12 was obtained by segregating the average energy
consumed per household (Table F-13) into average electricity consumed. This was
done by the breakdown of total energy into the amount of electricity and gas
consumed (Table F-14). This data is based on the year 2011 which was published
by the government in the year 2013 (GOV UK, 2013).

Table F-13: Average Household Energy Consumption (MWh)

Average Household
Region Energy Consumption
(MWh), 2011
Wales 14.9
North East 16.9
North West 16.8
West Midlands 16.5
Yorks and The Humber 17
London 16.4
South East 16.5
East of England 15.6
South West 13.4
East Midlands 16.6

Source: (GOV UK, 2013)

Table F-14: Breakdown of Total energy consumed into Gas and Electricity

Percentage of
Percentage of Gas
Region Electricity
consumed (%)
consumed (%)
Wales 25.8 74.2
North East 20.9 79.1
North West 23.5 76.5
West Midlands 24.9 75.1
Yorks and The Humber 22.4 77.6
London 24.1 75.9
East Midlands 24.4 75.6
South West 32.3 67.7
South East 26.6 73.4

Source: (GOV UK, 2013)

MSc Thesis 220

The consumption of electricity has been decreasing in the past few years as shown
in the table F-15. The rapid developments in every industry have resulted in more
efficient and dynamic usage of technology. Nevertheless that decrease in the South
East of England is fairly moderate.

Table F-15: Change in electricity and Number of meters (2014)

Change in Total
Change in
Total Annual Annual Number of
Number of
Region Electricity Electricity Meters
Meters from
consumed (GWh) consumed from (thousands)
previous year (%)
previous year (%)

UK 289976 -0.3 29925 0.4

North East 11869 1 1280 0.2

North West 32168 -1.1 3389 0.3

West Midlands 24492 0.6 2584 0.5

Yorks and The Humber 23686 0.8 2528 0.2

London 40478 -0.8 3837 0.5

East Midlands 21113 2.1 2162 0.6

East England 26756 -0.8 2791 0.5

South West 24277 -0.6 2707 0.6

South East 38802 -0.5 4086 0.4

England 243640 -0.1 25363 0.4

Wales 15546 1.8 1510 0.5

Scotland 25873 -1.2 2979 0.2

Source: (GOV UK, 2013)

The domestic consumption of electricity is distributed across the South East of

England at different rates. As observed from the table F-16, locations like Cornwall
UA and West Somerset use more than 5 kWh of electricity per household while
locations like Gloucester and Exeter use less than 4 kWh per household; both cases
give annual figures respectively (GOV.UK, 2013). This set of data provides us with
an indication on the amount of electricity expected to produce in distinct sub regions.

MSc Thesis 221

Table F-16: Avg annual domestic electricity consumption per household
(kWh) in selected sub regions

Average domestic
Region consumption per
household (kWh)
SOUTH EAST OF ENGLAND 4,4
Bath and North East Somerset UA 4,382
Bournemouth UA 3,936
Bristol, City of UA 3,799
Cornwall UA 5,431
North Somerset UA 4,025
Plymouth UA 3,798
Poole UA 4,044
South Gloucestershire UA 4,118
Swindon UA 3,819
Torbay UA 4,126
Wiltshire UA 4,941
East Devon 4,505
Exeter 3,764
Mid Devon 4,749
North Devon 4,601
South Hams 5,447
Teignbridge 4,574
Torridge 4,788
West Devon 4,997
Christchurch 4,005
East Dorset 4,497
North Dorset 4,880
Purbeck 4,555
West Dorset 5,013
Weymouth and Portland 3,858
Cheltenham 3,952
Cotswold 5,977
Forest of Dean 4,909
Gloucester 3,998
Stroud 4,678
Tewkesbury 4,289
Mendip 4,595
Sedgemoor 4,607
South Somerset 4,811
Taunton Deane 4,324
West Somerset 5,234

Source: (GOV.UK, 2013)

MSc Thesis 222

Analysis of local authorities shows that 8 of the top 10 electricity producing sub
regions of the country are in the South East of England. These local authorities are
given in the table F-17.

Table F-17: Top 10 electricity producing Local authorities

Avg Electricity
Local Authority Region consumed
(MWh)

South Bucks South East 6.3574

Elmbridge South East 6.1446
Chiltern South East 6.0914
Surrey Heath South East 5.8254
Tandridge South East 5.719
Mole Valley South East 5.6924
Three Rivers East 5.5335
Epsom and Ewell South East 5.5062
Waverley South East 5.5062
Harrow London 4.2849

Source: (ONS, 2013)

The table F-18 shows some of the counties in the South East of England with their
capability of generating electricity through solar power. Here the roofs are presumed
to face south. These locations are also among the top solar PV electricity producers
in the country.

MSc Thesis 223

Table F-18: Annual energy generated by a 1 kWp solar PV system

Optimum Annual
Location Inclination Generation
(degrees) (kWh/kWp)
Ashford, Kent 38 978

Heathfield, East Sussex 37 984

Worthing, West Sussex 39 1070

Winchester, Hampshire 37 933
Reading, Berkshire 38 925

Oxford, Oxfordshire 38 922

Aylesbury, Buckinghamshire 38 915

Source: (Renewables Tool Kit, 2014)

F-7 Analysis on Feed-in-Tariff (FIT) scheme

The Feed-in-Tariff (FIT) scheme introduced in April 2010 is vital for the success of
our company. It encourages the customers into buying the panels as there are
several economic benefits associated with it as mentioned earlier. The FIT has been
registered across the country and the data as of 2014 is given in the figure F-9. It
shows the FIT uptake in the last few years.

A regional breakdown of registered FIT installations is shown in the figure F-10

which shows the current trend at different areas. It can be seen that the South East
of England is among the regions with the highest intake of FIT registrations which is
an encouraging sign for our company.

MSc Thesis 224

Figure F-9: Registered FIT installations in different regions of the United
Kingdom
Source: (Energy Saving Trust, 2014)

MSc Thesis 225

Figure F-10: Breakdown of Registered FIT installations
Source: (Energy Quotes, 2014)

From the figure F-11, it can be seen that the rate of increase in the number of FIT
registrations in South East of England is second highest following South West of
England.

MSc Thesis 226

Figure F-11: Rate of increase in the number of FIT registrations
Source: (Energy Saving Trust, 2014)

With the rapid decease in costs, FIT rates are impacted due to the influence of
degression rates. Last few months have seen the contingent degression rates being
triggered due to the large amount of solar power being deployed. A comparison of
degression rates triggered in the last three years is given in the table F-19.

MSc Thesis 227

Table F-19: Degression rates (May 2012 – June 2015)
Tariff band = Solar photovoltaic 0-10 kW

Deployment
Deployment Number of Degression
in period
period installations Rate
(kW)
3.5%
May - Jul 2012 52,043 163,769
(contingent)
Aug - Oct 2012 20,034 61,048 none

Nov '12 - Jan '13 16,726 50,268 none

3.5%
Feb - Mar 2013 14,539 44,213
(mandatory)
Apr - Jun 2013 29,239 93,416 none

Jul - Sep 2013 21,718 66,605 none

3.5%
Oct - Dec 2013 28,440 88,621
(mandatory)
Jan - Mar 2014 30,557 98,447 none

Apr - Jun 2014 26,871 83,294 none

3.5%
Jul - Sep 2014 33,231 102,958
(contingent)
3.5%
Oct - Dec 2014 39,545 123,688
(contingent)
3.5%
Jan - Mar 2015 34,170 103,046
(contingent)
3.5%
Apr - Jun 2015 38,046 116,983
(contingent)

Source: (GOV.UK, 2015)

MSc Thesis 228

F-8 Breakdown of Carbon Dioxide released into the atmosphere
As of 2011, South East of England was one of the regions with the lowest amount of
carbon dioxide being released into the atmosphere (ONS, 2011). It shows the
relative clean atmosphere available in the region. The figure F-12 shows the
Breakdown of Carbon Dioxide released into the atmosphere in the UK. It indicates
that the southern part of the country release less amount of carbon dioxide into the
atmosphere.

14
CO2 released (%)

12

10

UK Regions

Figure F-12: Breakdown of Carbon Dioxide released into the atmosphere in the
UK (%)
Source: (ONS, 2011)

MSc Thesis 229

F-9 Analysis on Ports, Offices and Workforce
Being one of the major ports in the country, the Port of Dover handles the highest
number of Roll On - Roll Off (RoRo) freight units as of 2013 (Table F-20). This is an
encouraging sign since RoRo is an option for us to import the manufactured products
from China. In addition to RoRo freight units they also handle the Lift On – a Lift Off
(LoLo) freight unit which is another significant option for the importation of materials.

Table F-20: Top RoRo freight unit handling ports in the United Kingdom

Ports Roll-on/Roll-off Cargo (Million Tonnes)

Dover 24.9
Grimsby & Immingham 14.5
London 7.6
Liverpool 6.6
Belfast 5.8

Source: (GOV.UK, 2014)

Due to the low costs of offices in Kent it was agreed that this region was the most
industrious‎location‎to‎start‎the‎company’s‎business. With utilitarian containers being
used to import the manufactured items, a cost-effective approach was taken for
storage. The imported items will be directly positioned near to the occupied office.

Some of the potential offices (with storage space available) in the south of England
are presented in the table F-21. Here similar offices in the sites of Kent, London,
Reading and West Sussex, major cities located near the target market are
compared. The size and price of these sites are mentioned as well which shows the
financial benefits of starting the company in Kent with respect to a major city like
London.

The comparisons given are for offices with size at around 950sqft which is a
reasonable size required for our designated office and storage. Furthermore these
were selected from the same reputable source and give the lowest available price.

MSc Thesis 230

Table F-21: Price comparison between Offices (with storage) in different
locations situated in the south of England for a size of 900sqft - 1000sqft

Office Location Site Size (sq ft) Price (pa)

London Road,
Kent 950 £5,000
Hadleigh , Essex, SS7
2DD

London Redlands, Coulsdon, 960 £11,500

CR5

Thatcham, Unit 6B,

Reading 1000 £6,000
West Berkshire

The Henfield Business

West Sussex 900 £7,000
Park,West Sussex,
BN5 9SL

Source: (Right Move, 2015)

Although employing staff from across the United Kingdom especially London is
viable, there are a lot of labourers available in the South East of England. The table
F-22 shows the number of employees available‎in‎categories‎like‎‘production’,‎
‘services’‎and‎‘other’‎where‎the‎South‎East‎of‎England‎leads‎in‎the‎latter‎two‎
categories alongside London.

MSc Thesis 231

Table F-22: Breakdown of Workforce in the United Kingdom

Location Production Services Other

Northern Ireland 93,783 655,552 93,920

Scotland 270,305 2,221,571 212,042

Wales 172,973 1,116,725 142,075

South West 271,003 2,331,747 267,995

South East 315,800 3,995,397 365,403

London 157,480 5,154,634 307,590

East of England 261,259 2,485,358 263,997
West Midlands 351,591 2,258,379 209,643

East Midlands 310,338 1,776,612 163,012

Yorkshire and The
319,026 2,080,531 191,167
Humber
North West 383,129 3,036,789 240,379
North East 135,261 969,152 75,412

Source: (ONS, 2015)

6,000,000
Total Workforce

5,000,000
4,000,000
3,000,000
2,000,000
1,000,000 Production
0 Services
Yorkshire and The…
North West
Wales

North East
South East
London
South West

East of England
West Midlands
East Midlands
Northern Ireland
Scotland

Other

UK Regions

Figure F-13: Breakdown of Workforce in the United Kingdom

Source: (ONS, 2015)

MSc Thesis 232

The required workforce for our company is given in the table F-23. It shows that
South East of England has an adequate pool of labourers to work in the specific
tasks‎that‎are‎required‎for‎the‎realisation‎of‎the‎company’s‎objectives.‎The‎given‎
data is taken out of 4,677,000 labourers surveyed in the region (ONS, 2015).

Table F-23: Workforce in required fields in the South East of England (in
Thousands)

Change
Sep- Dec- Mar- from Change
Jun-14
14 14 15 previous in %
year

Transport &
196 197 201 205 7 3.7
storage

Information &
277 282 282 280 3 1.1
communication

Financial &
insurance 145 139 142 146 11 7.9
activities

Professional
scientific &
424 422 424 410 -23 -5.2
technical
activities

Administrative &
support service 368 374 375 384 19 5.1
activities

Source: (ONS, 2015)

MSc Thesis 233

F-10 Distribution of Roofs with and without Solar PV installations
in the South East of England
South East of England has a fairly high amount of roofs with and without solar panels
distributed varyingly. Therefore it is important to understand the statistics on roofs in
different local authorities. This gives the company a capacity to plan its strategy
along with the forecast being done on a long term basis. There are 67 local
authorities present in the South eastern region of which 12 are situated in the region
of Kent.

Analysis was done by studying the extent at which solar panels were installed in
different locations based on the map given in figure F-14. Since the data given in the
map for different local authorities are per 10000 homes, the number of roofs with
solar panels was calculated using the data acquired for total number of roofs in
different local authorities. . Data was collected for this calculation from Jonathan
Whiting, 2015; GOV.UK, 2015; Carlex, 2014 and Solar UK, 2015.

The number of roofs was also computed based on the assumption that all local
authorities of the South East of England have the same amount of leaseholds (taking
the mean leasehold in South East England as explained in the Appendix F-5). The
derived calculations are given in the table F-24 for the region of Kent. The statistics
for all 67 local authorities of South East of England is given in the table F-25. This
table allows us to understand and comprehend the current state of solar market in
the region.

MSc Thesis 234

Figure F-14: Solar Installation Map showing all Local Authorities (per 10000
households)
Source: (Jonathan Whiting, 2015)
MSc Thesis 235
Table F-24: Roofs with and without Solar PV installations in Kent

Number of
Roofs Roofs
Solar No of
Region with without
Installations/ roofs
Solar PV Solar PV
10000 Roofs
Ashford 226-300 39855 901-1196 38954-38659

Canterbury 226-300 49233 1113-1477 48120-47756

Dartford 76-150 33603 255-504 33348-33099

Dover 151-225 39073 590-879 38483-38194

Gravesham 376-450 32822 1234-1477 31588-31345

Maidstone 151-225 52358 791-1178 51567-51180

Sevenoaks 151-225 38292 578-862 37714-37430

Shepway 151-225 38292 578-862 37714-37430
Swale 151-225 46107 696-1037 45411-45070

Thanet 151-225 48451 732-1090 47719-47361

Tonbridge
151-225 39855 602-897 39253-38958
and Malling
Tunbridgre
151-225 39073 590-879 38483-38194
Wells

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 236

Table F-25: Roofs with and without Solar PV installations in South East of
England
Number of
Solar Roofs with Roofs without
Si Region No of roofs
Installations/1 Solar PV Solar PV
0000 Roofs
1 Adur 151-225 21881 330-492 21551-21389
2 Arun 151-225 53921 814-1213 53107-52708
3 Ashford 226-300 39855 901-1196 38954-38659
4 Aylesbury Vale 226-300 57829 1307-1735 56522-56094
5 Basingstoke and Deane 226-300 57829 1307-1735 56522-56094
6 Bracknell Forest UA 76-150 38292 291-574 38001-37718
7 Brighton and Hove UA 76-150 98465 748-1477 97717-96988
8 Canterbury 226-300 49233 1113-1477 48120-47756
9 Cherwell 226-300 46107 1042-1383 45065-44724
10 Chichester 226-300 40636 918-1219 39718-39417
11 Chiltem 226-300 29696 671-891 29025-28805
12 Crawley 151-225 35166 531-791 34635-34375
13 Dartford 76-150 33603 255-504 33348-33099
14 Dover 151-225 39073 590-879 38483-38194
15 East Hampshire 301-375 38292 1153-1436 37139-36856
16 Eastbourne 226-300 36729 830-1102 35899-35627
17 Eastleigh 226-300 42981 971-1289 42010-41692
18 Elmbridge 76-150 42199 321-633 41878-41566
19 Epsom and Ewell 76-150 24226 184-363 24042-23863
20 Fareham 226-300 37511 848-1125 36663-36386
21 Gosport 151-225 28914 437-651 28477-28263
22 Gravesham 376-450 32822 1234-1477 31588-31345
23 Guildford 151-225 43762 661-985 43101-42777
24 Hart 226-300 28914 653-867 28261-28047
25 Hastings 76-150 32822 249-492 32573-32330
26 Havant 226-300 41418 936-1243 40482-40175
27 Horsham 226-300 44544 1007-1336 43537-43208
28 Isle of Wight 376-450 49233 1851-2215 47382-47018
29 Lewes 301-375 34385 1035-1289 33350-33096
30 Maidstone 151-225 52358 791-1178 51567-51180
31 Medway UA 151-225 87525 1322-1969 86203-85556
32 Mid Sussex 226-300 46888 1060-1407 45828-45481
33 Milton Keynes 226-300 82054 1854-2462 80200-79592

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 237

Table F-25 (continued)
Number of
Solar Roofs with Roofs without
Si Region No of roofs
Installations/1 Solar PV Solar PV
0000 Roofs
34 Mole Valley 151-225 28914 437-651 28477-28263
35 New Forest 301-375 61736 1858-2315 59878-59421
36 Oxford 76-150 43762 333-656 43429-43106
37 Portsmouth UA 76-150 69551 529-1043 69022-68508
38 Reading UA 76-150 50795 386-762 50409-50033
39 Reigate and Banstead 76-150 46107 350-692 45757-45415
40 Rother 226-300 32822 742-985 32080-31837
41 Runnymede 76-150 26570 202-399 26368-26171
42 Rushmoor 76-150 29696 226-445 29470-29251
43 Sevenoaks 151-225 38292 578-862 37714-37430
44 Shepway 151-225 38292 578-862 37714-37430
45 Slough UA 0-75 42199 0-316 42199-41883
46 South Bucks 151-225 21881 330-492 21551-21389
47 South Oxfordshire 226-300 43762 989-1313 42773-42449
48 Southampton 151-225 78928 1192-1776 77736-77152
49 Spelthorne 76-150 32040 244-481 31796-31559
50 Surrey Heath 151-225 27351 413-615 26938-26736
51 Swale 151-225 46107 696-1037 45411-45070
52 Tandridge 76-150 27351 208-410 27143-26941
53 Test Valley 226-300 38292 865-1149 37427-37143
54 Thanet 151-225 48451 732-1090 47719-47361
55 Tonbridge and Malling 151-225 39855 602-897 39253-38958
56 Tunbridgre Wells 151-225 39073 590-879 38483-38194
57 Vale of White Horse 226-300 40636 918-1219 39718-39417
58 Waverley 226-300 39855 901-1196 38954-38659
59 Wealden 301-375 51577 1552-1934 50025-49643
60 West Berkshire UA 151-225 50014 755-1125 49259-48889
61 West Oxfordshire 451-525 35948 1621-1887 34327-34061
62 Winchester 301-375 38292 1153-1436 37139-36856
63 Windsor and Maidenhead UA 151-225 47670 720-1073 46950-46597
64 Woking 151-225 31259 472-703 30787-30556
65 Workingham UA 151-225 49233 743-1108 48490-48125
66 Worthing 76-150 38292 291-574 38001-37718
67 Wycombe 151-225 54703 826-1231 53877-53472

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 238

F-11 Forecast on new Solar PV installations done by 2016.
A forecast was also done to apprehend the possible number of solar panels installed
in different local authorities of South East of England for the year 2016. There was
an increase of 20.84% and 21.48% in the number of Solar PV deployed for the years
2014 and 2015 respectively (GOV.UK, 2015). It is therefore estimated that there will
be an increase of 22.12% for the year 2016. At the same time the projections on
houses indicates that there will be a rise of 24,412 new roofs in 2016 (GOV UK,
2015).

Thus an analysis was done by distributing the new roofs to the current number of
roofs in different local authorities proportionally. The new Solar PV installations for
the year 2016 is then calculated by using the 22.12% solar PV increase from the
current data on solar installations and the new altered data on roofs. Here data was
collected for this calculation from Jonathan Whiting, 2015; GOV.UK, 2015; Carlex,
2014 and Solar UK, 2015.

The table F-26 shows that regions such as New forest and Southampton are
expected to have more than 300 solar installations in the region. But regions such as
Rushmoor, Epsom and Ewell are expected to perform poorly in the market; standing
at only around 72 and 59 new installations respectively during the year 2016. This
information provides a foundation for us to lay down our policies, approaches and
strategies in the running of the company.

MSc Thesis 239

Table F-26: Forecast of Solar PV installations in South East of England in 2016
2015 2016
Roofs Roofs Roofs Roofs Increase in
No of No of
Si No Region with Solar without with without Roofs with
Roofs Roofs
PV Solar PV Solar PV Solar PV Solar PV
1 Adur 21881 405 21476 22078 495 21583 90
2 Arun 53921 998 52923 54406 1219 53187 221
3 Ashford 39855 1036 38819 40214 1265 38949 229
4 Aylesbury Vale 57829 1504 56325 58349 1837 56512 333
5 Basingstoke and Deane 57829 1504 56325 58349 1837 56512 333
6 Bracknell Forest UA 38292 421 37871 38637 514 38123 93
7 Brighton and Hove UA 98465 1083 97382 99351 1323 98028 240
8 Canterbury 49233 1280 47953 49676 1563 48113 283
9 Cherwell 46107 1199 44908 46522 1464 45058 265
10 Chichester 40636 1057 39579 41002 1291 39711 234
11 Chiltem 29696 772 28924 29963 943 29020 171
12 Crawley 35166 651 34515 35482 795 34687 144
13 Dartford 33603 370 33233 33905 452 33453 82
14 Dover 39073 723 38350 39425 883 38542 160
15 East Hampshire 38292 1283 37009 38637 1567 37070 284
16 Eastbourne 36729 955 35774 37060 1166 35894 211
17 Eastleigh 42981 1118 41863 43368 1365 42003 247
18 Elmbridge 42199 464 41735 42579 567 42012 103
19 Epsom and Ewell 24226 266 23960 24444 325 24119 59
20 Fareham 37511 975 36536 37849 1191 36658 216
21 Gosport 28914 535 28379 29174 653 28521 118
22 Gravesham 32822 1346 31476 33117 1644 31473 298
23 Guildford 43762 810 42952 44156 989 43167 179
24 Hart 28914 752 28162 29174 918 28256 166
25 Hastings 32822 361 32461 33117 441 32676 80
26 Havant 41418 1077 40341 41791 1315 40476 238
27 Horsham 44544 1158 43386 44945 1414 43531 256
28 Isle of Wight 49233 2019 47214 49676 2466 47210 447
29 Lewes 34385 1152 33233 34694 1407 33287 255
30 Maidstone 52358 969 51389 52829 1183 51646 214
31 Medway UA 87525 1619 85906 88313 1977 86336 358
32 Mid Sussex 46888 1219 45669 47310 1489 45821 270
33 Milton Keynes 82054 2133 79921 82792 2605 80187 472

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 240

Table F-26 (continued)
2015 2016
Roofs Roofs Roofs Roofs Increase in
No of No of
Si No Region with Solar without with without Roofs with
Roofs Roofs
PV Solar PV Solar PV Solar PV Solar PV
35 New Forest 61736 2068 59668 62292 2525 59767 457
36 Oxford 43762 481 43281 44156 587 43569 106
37 Portsmouth UA 69551 765 68786 70177 934 69243 169
38 Reading UA 50795 559 50236 51252 683 50569 124
39 Reigate and Banstead 46107 507 45600 46522 619 45903 112
40 Rother 32822 853 31969 33117 1042 32075 189
41 Runnymede 26570 292 26278 26809 357 26452 65
42 Rushmoor 29696 327 29369 29963 399 29564 72
43 Sevenoaks 38292 708 37584 38637 865 37772 157
44 Shepway 38292 708 37584 38637 865 37772 157
45 Slough UA 42199 148 42051 42579 181 42398 33
46 South Bucks 21881 405 21476 22078 495 21583 90
47 South Oxfordshire 43762 1138 42624 44156 1390 42766 252
48 Southampton 78928 1460 77468 79638 1783 77855 323
49 Spelthorne 32040 352 31688 32328 430 31898 78
50 Surrey Heath 27351 506 26845 27597 618 26979 112
51 Swale 46107 853 45254 46522 1042 45480 189
52 Tandridge 27351 301 27050 27597 368 27229 67
53 Test Valley 38292 996 37296 38637 1216 37421 220
54 Thanet 48451 896 47555 48887 1094 47793 198
55 Tonbridge and Malling 39855 737 39118 40214 900 39314 163
56 Tunbridgre Wells 39073 723 38350 39425 883 38542 160
57 Vale of White Horse 40636 1057 39579 41002 1291 39711 234
58 Waverley 39855 1036 38819 40214 1265 38949 229
59 Wealden 51577 1728 49849 52041 2110 49931 382
60 West Berkshire UA 50014 925 49089 50464 1130 49334 205
61 West Oxfordshire 35948 1743 34205 36272 2129 34143 386
62 Winchester 38292 1283 37009 38637 1567 37070 284
63 Windsor and Maidenhead 47670 882 46788 48099 1077 47022 195
64 Woking 31259 578 30681 31540 706 30834 128
65 Workingham UA 49233 911 48322 49676 1113 48563 202
66 Worthing 38292 421 37871 38637 514 38123 93
67 Wycombe 54703 1012 53691 55195 1236 53959 224

Data collected from (Carlex, 2014;Solar UK, 2015;GOV.UK, 2015;Jonathan Whiting,

2015)

MSc Thesis 241

Appendix G Logistics and Supply Chain Management

G-1 Comparison of Key Suppliers

We have researched the suppliers who are manufacturing monocrystalline panels all over
the world. We have shortlisted some of the main key suppliers based on cost and efficiency.
When we compared the key suppliers from different countries, we came to know that Suntek
who manufacture monocrystalline solar panels from China produces the cheapest among
others and with high efficiency. The cost of a Suntek panel is £86.00 and the efficiency is
17.3% compared to the cost of Yingli which is £243 and efficiency 17.2%. Comparing that
with any other supplier, the price keeps on increasing. While comparing efficiencies, there is
not much difference between the suppliers. Judging from all the facts presented, it is evident
that the cheapest and efficient panel among them is Suntek. And we chose to use Suntek
solar panels in our project. Table G-1 shows the cost comparison of 1500 monocrystalline
solar panels between the key suppliers.

Table G-1: Manufacturers/ Suppliers of monocrystalline solar panels

Manufacturers/
Price of 1500
Supplier Capacity Efficiency Warranty Unit Price
panels
(Country)
Yingli Solar
280W 17.20% 10 years £243 £252,000
(China)

Winaico (Taiwan) 280W 16.84% 10 years £300 £288,000

Suntech (India) 280W 15.40% 10 years £144 £216,000

Sunel (China) 300W 17.70% 10 years £131 £219,000

GP (China) 280W 16.40% 10 years £130 £195,000

Jinko solar
300W 16.21% 10 years £130 £178,500
(China)

Suntek (China) 300W 17.30% 10 years £86 £129,000

Sources: (Alibaba, Amazon, Pvshop)

The quotations for the monocrystalline solar panels from the key suppliers are shown
in the figures below. The figure G-1 shows the cost of one monocrystalline solar
panel of GP. The figure G-2 shows the cost of one monocrystalline solar panel of

MSc Thesis 242

Jinko. The figure G-3 shows the cost of one monocrystalline solar panel of Suntech.
The figure G-4 shows the cost of one monocrystalline solar panel of Suntek. The
figure G-5 shows the cost of one monocrystalline solar panel of Winaico. Figure G-6
shows the cost of one monocrystalline solar panel of Yingli.

Figure G-1: Cost of GP Monocrystalline panel

Source: (Alibaba, 2015)

Figure G-2: Cost of Jinko Monocrystalline Panel

Source: (Alibaba, 2015)

MSc Thesis 243

Figure G-3: Cost of Suntech Monocrystalline Panel
Source: (PV Direct, 2015)

Figure G-4: Cost of Suntek Monocrystalline Panel

MSc Thesis 244

Figure G-5: Cost of Winaico Monocrystalline Panel
Source: (PV Shop, 2015)

Figure G-‎10: Cost of Yingli Monocrystalline Panel

Source: (PV Shop, 2015)

MSc Thesis 245

G-2 Suntek Profile

The below Figure G-7 gives us the company profile of Suntek where it says about
the companies entire history where it can be trusted based on.

Figure G-7: Suntek Profile

After selecting Suntek as our supplier based on cost effective and efficiency. We
have contacted our supplier who is manufacturing the solar panels in their own plant
and supplying all over the world. We asked them that we are supposed to order 1500
solar panels every month and requested them to do it for the best price. The same
supplier is supplying us the inverters, mounting kit, isolators and the quotation for
those are also attached. They also said that they can give the necessary cables
needed for installation for free of cost.

MSc Thesis 246

G-3 Rent for Containers
As we are going to rent the container to store the goods we are not using the
warehouse for this project. We have decided to rent the container for each month
and swap the container upon next delivery. Here, we are going to use three 8*40
high cube container , the rent for those containers for a single month will be £288 it
can be seen in the figure below G-8. Upon delivery, the containers will be kept with
us and upon next delivery the containers will be swapped again. The rent for these
will be given in advance. The below Figure G-8 confirms the cost for renting the
containers for each month.

Figure G-8: Rent of 3* 40 HQ Containers

MSc Thesis 247

G-4 Specification of Container
The below table G-2 shows the Specification of the 40FT Container that we will be
used to carry the goods from the supplier place till our destination office. There will
be 3 Container that will be used in the projects for our goods.

Table G-2: Specification‎of‎40”‎High‎Cube‎Container

.Internal Container parameters

Length 12.03 m 39´06"

Width 2.35m 7´08"

Height 2.70m 8´10"

External Container parameters

Length 12.19 m 40´00"

Width 2.44 m 8´00"

Height 2.90 m 9´6"

Door opening

Width 2.34 m 7´08"

Height 2.58 m 8´05"

Cubic capacity 76.2 m3 2.690 ft3

Cargo weight capacity 28.590 kg 63.030 lbs

Tyre weight 3.910 kg 8.620 lbs

Max. Gross weight 32.500 kg 71.650 lbs

Source: (Specification of 40FT Containers, 2015)

MSc Thesis 248

G-5 Incoterms
Incoterms is nothing but international commercial terms. They are commonly used in
international trades across borders. There are 11 incoterm rules which are
commonly used are listed below.

 EXW represent as Ex Works

 FCA represent as Free Carrier
 CPT denotes Carriage Paid To
 CIP denotes Carriage and Insurance Paid To
 DAT means Delivered At Terminal
 DAP means Delivered At Place
 DDP means Delivered Duty Paid
 FAS denoted as Free Alongside Ship
 FOB denoted as Free On Board
 CFR is Cost and Freight
 CIF is Cost, Insurance and Freight

The below table G-3 explains about every incoterm risks and the responsibility
between the seller and buyer in each phases of the movement of goods.

Table G-3: Incoterms Risks

Source: (Shipping Terms, 2015)

MSc Thesis 249

Ex Works (EXW)

Ex Works is an incoterm where the seller disposes the goods for buyer at his own
premises or at the buyers named place like works, warehouse, factory, etc. Here, the
Seller‎won’t‎load‎the‎goods‎on‎any‎modes‎of‎transport‎or‎to‎clear‎the‎goods‎for‎
export. Buyers have the sole responsibility to take the goods from the sellers place
till his destination place. This incoterm is applicable for all modes of transport
(International Chamber Of Commerce, 2011).

Free Carrier (FCA)

Free Carrier (FCA) as the name denotes the seller responsibility is to deliver the
goods to the Carrier or other People Nominated by the buyer at the seller factory or
other proposed place. During delivery to carrier to the proposed place, Seller has the
responsibility to advice the carrier as clearly as possible within the named. From
there the risks are been transferred to the buyer (International Chamber Of
Commerce, 2011).

Carriage Paid To (CPT)

Carriage Paid to (CPT) rule is that the seller delivers the goods to the carrier or other
place agreed by buyer or any other place agreed by the parties. Here, Seller needs
to put the contract and he has to pay the costs required for the carriage till the
destination place. This rule is applicable for every modes of transport (International
Chamber Of Commerce, 2011).

Delivered At Terminal (DAT)

Delivered at Terminal (DAT) means that the seller delivers the goods to the
destination place or any port agreed by the buyer and once unloaded from the seller
transport to the disposal place or port or terminal. It may be a place or a warehouse
or a loading bay. The seller bears all the responsibility for bringing the goods and
unloading them to the named destination place or port mentioned and agreed by the
buyer. The seller pays the cost for the carrier as well the insurance for goods. This
incoterm is applicable for every mode of transport (International Chamber Of
Commerce, 2011).

MSc Thesis 250

Delivered At Place (DAP)

Delivered AT Place (DAP) means that the sellers delivers the goods to the disposal
of the buyer at the named destination place agreed by the buyer and made available
for unloading.in the named destination place. The seller bears the responsibility and
risk to bring the goods till the destination place. This incoterm is applicable for every
mode of transport (International Chamber Of Commerce, 2011).

Delivered Duty Paid (DDP)

Delivered Duty Paid (DDP) means that the seller delivers the goods to the
destination place agreed by the buyer, the seller clears the import and made the
goods ready for unloading at the named destination place. The seller bears the cost
for carriage and insurance and he also has the responsibility on paying the cost of
import and export of the goods and he bears all the risk on transport. He has the
responsibility to clear the goods from customs. This incoterm is applicable for every
modes of transport (International Chamber Of Commerce, 2011).

Free Alongside Ship (FAS)

In Free alongside Ship (FAS) the seller delivers the goods and loads them in vessel
and kept in quay or barge nominated by the buyer at the named destination port.
When the goods are placed alongside ship the risks are transferred to the buyer from
that point of time. Here, buyer pays all the necessary cost for transport from that pint
onwards. This incoterm is applicable for inland and waterways only (International
Chamber Of Commerce, 2011).

Free On Board (FOB)

In Free On Board (FOB), the seller delivers the goods to the named destination port
and the goods are loaded into the vessel nominated by the buyer at the named port
of shipment. From there, the risks are transferred to the buyer and he bears every
cost of transport and clearance from that point onwards. This incoterm is used only
for inland and waterways only (International Chamber Of Commerce, 2011).

MSc Thesis 251

Cost and Freight (CFR)

In Cost and Freight (CFR), the seller delivers the goods and loads them in the vessel
at the named destination port nominated by the buyer. From there, the risk is then
transferred to buyer till his own destination. The seller bears to pay the necessary
cost for carriage and insurance till the destination place .this mode of transport is
applicable for inland and waterways only (International Chamber Of Commerce,
2011).

Cost Insurance and Freight (CIF)

According to Cost Insurance and Freight, the seller is responsible for paying the
freight and insurance cost for the carriage until the goods reaches the destination.
Here too the risk gets transferred to the buyer when the goods are on-board. From
this point the buyer should face each and every risk factors involved in the
transportation of goods. This incoterm is applicable for inland and waterways only
(International Chamber Of Commerce, 2011)

G-6 Direct Cost Comparisons

Cost Comparison of 1500 Monocrystalline Solar Panels

The price of one 300w monocrystalline solar panel of Suntek from China is £86 and
if we compare that with the average price of one 300w monocrystalline solar panel in
UK Is £287 .The Efficiency of Suntek solar panels are 17.3% which is way higher
than any other monocrystalline panel in UK .If we calculate that to 1500 solar panels,
the cost of panels in China will be £129,000 and the cost of 1500 panels in UK is
£430,500. So, China produces the cheapest and efficient solar panels than UK. The
price of those panels can be seen in the figure below G-19.

The below figure G-19 shows the cost of one 300w monocrystalline solar panel
which is £287 in UK The price is actually taken in amazon to compare the price of
the panel in China. when we compared both we saw a vast difference in prices and
after calculating the freight cost and insurance it is still cheaper and hence we have
opted to import the panels from China .the below appendix was taken from amazon
and I have pasted below for further clarification.

MSc Thesis 252

Figure G-9: Cost Comparison of Solar Panels between China and UK
Source: (Amazon, 2015)

Cost Comparison of 110 Inverters

In this project we are going with string inverter, where the cost of one 4KW string
inverter in China is £416 and the cost of same in UK is £899 can be seen in the
figure below G-20. Every order we going to order 110 inverters and the cost for
those 110 inverters from China will‎be‎£45,760‎whereas‎in‎UK‎it’s‎going‎to‎cost‎us‎
£98,890.Therefore, the cost of inverters In China is cheaper when compared to UK.
So, in this project we are going to buy the inverter from the same supplier we are
buying the solar panels from China.

We have compared the cost and capacity of the inverter with UK. The figure G-10
below shows that the cost of the inverter in UK is costlier than China. As we can see
the cost of the inverter in China is £416 and when we compared with UK which is
£899 which is too much and hence we opted to choose suntwins inverter from China.
The below figure G-20 is taken from eBay website in UK and I have pasted below for
further clarification.

MSc Thesis 253

Figure G-‎1010: Cost Comparison of String Invertors between China and UK
Source: (EBay)

Cost Comparison of Cables

Since we are buying every product from the same supplier, the supplier has agreed
to give the cables (positive, negative and neutral) on average of 5 metre of AC and
DC cables per installation for free of cost. If we buy the same in UK on average of 5
metre of AC and DC cables per installation it will cost us £1725 for 115 installations.

Cost Comparison of AC and DC Isolator Switch

The cost of one 2 pole 15A AC isolator switch in China is £6 and for DC 15A Isolator
Switch is £9 when we compare that to the average UK, the cost of 2 pole AC Isolator
Switch is £24 and for 2 pole DC isolator switch is £35.The cost for 110 AC and DC
isolator switch in China will be £660 and £990 respectively and the cost of 110 AC
and DC isolator switch in UK will be £2640 and £3850 respectively. So, China
produces the cheapest isolator switches when compared to UK are show in the
figure G-21 below.

Our supplier is having a relationship with the manufacturers who are manufacturing
isolator switches. our supplier has forwarded us the quotation from the manufacturer

MSc Thesis 254

for the ac and dc isolator switches which is the cheapest of all and we have no regret
in choosing the isolators switches as comparing that price to the price in UK we have
seen a vast difference in the cost .here, in this project we are going with 2 pole 15a
dc and ac isolator switches. And our supplier assured us about the quality of the
switches‎that‎it’s‎top-notch.

We have also researched the cost of isolators in UK to compare the prices of the
same with China and we concluded that the price in UK is too high when comparing
to China. the added advantage is that our supplier has tie up with the isolator
manufacturer , he assures us about the quality of the switches, the prices of the
isolator switches in UK is taken from the website and I have pasted it as my
appendix as you can see below In Figure G-21 for both AC and DC isolator switches.

Figure G-11: Cost Comparison of 110 Isolators between China and UK

Source: (EBay)

Cost Comparison of Mounting Kit

To mount the solar panels on the roof, we need some mounting accessories includes
(rails, rail splice kit, tile hook, end clamp and inter clamp) .these are coming as a
mounting kit and the cost for that kit in China is £34,500 for 1500 panels and if we
buy that in UK, it will be £72,000.Again, the cost of mounting kit in China is way
cheaper‎than‎UK.‎Hence,‎we‎don’t‎have‎any‎second‎thoughts other than importing

MSc Thesis 255

every product from China. The quotation for the mounting kit can be seen in figure
below G-22.

Figure G-12: Quotation for mounting kit

Freight Cost

The freight cost for three 8*40 high cube containers full of goods for the port of
Ningbo, China till the destination place which is our office which is located in
Canterbury road, laden, CT15 will be £5175 which will be including the local
transport from Dover port till the office location which is not very long. The price
comparison of the leading freight forwarders are compared below in table G-3.

Table G-4: Comparison of Freight costs (Exc Import Duty and Taxes)

Carrier Freight Costs

DFS £4950
Barrington Freight £5166
EMC £5175(Inc. import duty and
taxes)
Gigabiz £10,350
WFR £8400
(Exc – Excluding; Inc.- including)

Source: (Anon., 2015)

MSc Thesis 256

We have researched many freight forwarders who are forwarding freight from China
to UK. We have asked our supplier for suggesting the carrier partner and he asked
us to go for EMC freight forwarders as they are the one who has a tie up with our
supplier and they assured that they can give us the lowest price for the forwarding.
Thus, we have opted to go with EMC and asked them for the quotation and the
below Figure G-23 shows the conversation and the quotation for the cost of three
containers.

Figure G-13: EMC Freight Cost

Insurance Cost

The insurance cost for the freight can be calculated by 0.00008*PI value which will
be £234 which covers collision, accident, damage, fire, cyclone, sinking and
stranding. Acquiring Insurance for the goods will be very important as the risk of any
damage, accidents and other natural disasters can be minimized by insuring our
value of goods to an insurance company and paying the premium as most of the
money can be reclaimed if any uncertainty happens.

MSc Thesis 257

Appendix H Risks and Risk Management
H-1 Risk Identification
Table H-1: Risk Identification

Category Id Risk PESTEL

No Category
B1 Project Cost could exceed planned budget Economical
B2 Exchange Rate Swing Political,
Economical
B3 Taxes levied on project activities could Political,
increase Economical
Business Risks

B4 Cost of PV Modules could increase Economical

B5 Cost of labour could increase Political,
Economical
B6 Incentives could be reduced or removed Political,
over time Economical
T1 There could be delay in delivery of Economical
components from suppliers
T2 Some Items could be damaged during Economical
transportation
T3 Confiscation, Expropriation and Political
Transportation

Nationalisation (CEN) issues during

transportation

T4 There could be increase in Transport costs Economical

and logistics
I1 Components could be damaged during Economical
installation
I2 Customer Property could be damaged Economical,
during installation Social
I3 Injuries could occur during Installation Social
I4 Possible Fire outbreak during Installation Environmental,
Installation

Social
I5 Could be difficult to get EPC Political
I6 Installation equipment or tools could develop Economical
malfunctions
M1 Low demand for Solar Power(PV) Political,
Economical
M2 There may be advancements in the PV Solar Technological
system technologies
Othe Post Market

M3 There could be areas within the market Political

which have listed buildings
Insta

P1 Installed PV Solar systems could develop Economical

llatio

unsatisfactory performance
n

O1 Poor Weather and Climate change Environmental

O2 Theft, Sabotage and Terrorism Social, Political
r

MSc Thesis 258

H-2 Risk Register
Table H-2: Risk Register

MSc Thesis 259

Table H-2 (Continued)

MSc Thesis 260

H-3 Quantifying the Risks Costs
The risks identified are threats to the business needs in terms of cost and time. The
Costs of these risks are very vital to the decision making of a business and its
operations. The identified risk costs may affect this company’s‎revenue‎in‎two‎ways.‎
Firstly, it causes the company to incur several expenses and secondly, it may cause
the company to acquire less returns and both cases leaves the company with a
lower financial position (Annual Revenue). Below are divisions of the effects of the
identified risks

1. Risks That Cost due to loss or damage of components

 T2- Items could be damaged during transportation
 T3- Confiscation, Expropriation and Nationalisation Issues during
Transportation
 I1- Components could be damaged during installation

2. Risks that cost due to economic changes

 B2- Exchange rate swing
 B3- Taxes levied on projects could increase
 B6- Incentive could be reduced or removed over time

3. Risks that cost from organisational operations

 B5- Cost of labour could Increase
 T4- There could be Increase in transport costs and logistics
 B4- Cost of PV modules could increase
 I2- Customer Property could be damaged
 I4- Possible Fire Outbreak during installation
 I6- Installation Equipment could develop malfunctions
 P1- Installed Systems could develop unsatisfactory performance

4. Risks that have effect on Time (Project Schedule)

 T1- Delay in Delivery of components
 I3- Injuries Could Occur during Installation
 I5- Could be difficult to get EPC

H-4 Justifications for Risk Evaluation Figures

The following are justifications behind the assumptions made on the costs that may
be incurred on risks directly affecting the finances of the project. These assumptions
have been made based on facts and are highlighted accordingly as follows:

MSc Thesis 261

B5- Labour Cost Could Increase

According to Trading Economics (2015), the labour cost in the UK is at an index

point of 105 and will remain that way until the second quarter of 2016. By 2020, there
may be an increase by only 2.8% amounting to 108 index points. The table below
shows the annual pay roll and its increment by 2.8% if the risk occurs.

Table ‎10H-3 Increment in Labour Costs

Factors Amount
Actual Labour Costs (Annual) £558,600.00
Increased Labour Costs (by £574,240.80
2.8%)
Increment £15,640.80

B6- Incentives could be reduced or removed over time

There have been proposals concerning FITs and although this situation is uncertain,
it could still occur. The effect of its occurrence may be complete removal of FITs or
modified schemes (Reduced Rates) (Hill, 2015) and this could have a negative
impact on the business because individuals may tend to be reluctant about PV Solar
installations on their roofs.

However, the interest of the people is still a priority as the government does not
intend to bring increase to the energy bills of the people. There will however be some
modifications on the entire Renewable energy incentives (Gov.uk, 2015). This
however indicates a strong possibility or continued FIT schemes.

Therefore based on the factors presented, which indicates that there is a possible
reduction of these incentives and also considering the fact that Global Solar Systems
is only interested in a one year period for FITs. The possibility of its occurrence is
low and its impact is moderately low, and as such it is convenient to place a range of
its‎impact‎on‎the‎project’s‎cost‎from‎2%‎to‎7%.‎‎‎

MSc Thesis 262

T2- Items could be damaged during transportation

This risk is mostly a low probability risk because the carrier is a well renowned brand
and in any case of damages we have made several assumptions as given below;

For every component, it is assumed that a minimum of one unit of the component
and a maximum of 5% of the component may be damaged during transportation.
Below is a table showing the cost value of the damages;

Table ‎10H-4: Transportation Damages

Factors Solar Panels Inverters AC Isolators DC Isolators

Quantity 1500 110 110 110
Minimum £86 £416 £6 £9
Damages (1 Unit)
Maximum £6,450 £2,288 £33 £49.50
Damages (5%)

T3- Confiscation, Expropriation and Nationalisation Issues

CEN is a political risk that occurs when assets (Landed Property, Inventory, Bank
Account, Retained earnings, etc.) are claimed by a foreign government (IRMI, 2015).

This risk is a very low probability risk but has a very high impact if it occurs because
it would cost the entire value of the components being transported. This means that
the cost that may be incurred if this risk occurs is £216,000. But however, this is
highly unlikely due to the fact that the business is a legitimate one and that all due
legislations are adhered to. There is also an insurance option which covers such
risks.

MSc Thesis 263

I1- Components could be damaged during installation

The cost of one installation is £2,800 and items being damaged during installation
vary by the type of component. The possibility for a panel to drop from a height is
more likely than that of other components. And the possibility of an inverter dropping
is not as high as well. However, this risk has a very low possibility due to the
preventive measures of having ropes to hold panels while working on heights and
the inverters having protective cases or covering. The other components however
have even much lower possibilities of damage in any case of dropping or liquid-
caused damage. With these facts, the assumptions made for any damages during
installation would be at a minimum cost of £168 and a maximum cost of £584. The
table below will provide clarity on the costing.

Table ‎10H-5: Component Damages during Installation

Items Minimum Cost Maximum Cost

Panels (1) £86 £86
Inverters (1) £416
Team Wages £32 £32
Other £50 £50
Expenses
Total £168 £584

Based on the above table, it is assumed that only on item could be damaged at the
minimum and considering the fact that the panels and inverters are the components
that could potentially cost for damages, it is fair to select the item with the least cost
value as the minimum. Also, for the maximum, the assumption is based on the
possibility of having damages on both the panels and inverters. Therefore each item
is assumed to have one damaged unit for the maximum range.

T4- There could be increase in Transport Costs and Logistics

This risk has a moderate probability as Freight Rate continues to be volatile (Todd,
2013) and there are no forecasts or projections that suggests otherwise. This
volatility however does not have a great impact on the business and as such it is
assumed that a minimum of 2% and a maximum of 7% cost increase will be incurred

MSc Thesis 264

for shipping giving an average of 4.5% increase in Logistics costs and sums up to
£9,743. (See Section Logistics costs)

B4- Cost of PV Modules could increase

This risk is a low probability risk and this is because the cost of PV modules have
been declining over the years as the cost of solar electricity have also declined
drastically when compared to its conception (Shahan, 2014). According to Giles
Parkinson (2015), solar costs will drop 40% in the next two years.

With these facts, it is evident that the costs for PV modules will most like drop rather
than increasing. But considering the risk, the assumed that the minimum increase of
PV modules in the near future will be at 1% and the maximum will be 5%. Below is a
table showing how the cost change if the risk occurs.

Table H-6: Solar Panel Cost Increment

Factors Current Cost Minimum Rise Maximum Rise

Actual Cost £129,000 £130,290 £135,450
Increment - £1,290 £6,450

From the table above the average increment from the figures is calculated to be
£3,870.

I2- Customer Property could be damaged

This risk is a low probability risk as the installation teams will be well qualified to
carry out their functions. However, if it were to occur, the customer properties that
are likely to be damaged are the Roof, Ceiling and Electrical Consumer Unit.
According to FixMyRoof.co.uk (2015), the cost of replacing roofs depending on the
degree of damage is between £150 and £400. Replacing consumer unit costs
between £300 and £500 (Tom's Electrical Services, 2015). The costs for repairing
ceiling are between £150 and £350 (Home Advisor, 2015). Below is a table showing
the cost range that could be incurred should the risk occur.

MSc Thesis 265

Table H-7: Repair and Replacement of Damaged Customer Property

Work Minimum Cost Maximum Cost

Roof Repair £150 £400
Ceiling Repair £150 £350
Consumer Unit £300 £500
Replacement
Total £600 £1,250

From the table, it can be said that the cost of repairing damages to customer
property affecting all three items is between £600 and £1,250. But considering the
risk and its probability, the minimum cost will be the minimum of one item (with the
least cost) which is £150 and the maximum cost will be the maximum for all three
items which is £1,250 peradventure all three items are damaged to the stated
maximum level. An average cost of these figures is calculated to be £700.

I4- Possible fire outbreak during installation

Fire outbreaks do not normally occur when installing the systems because the
electrical connections are done by skilled technicians. But in any case it occurs, this
will most likely occur from the consumer unit. However, the fire is the greatest
outcome should there be any form of electrical negativity. The cost of replacing a
consumer unit is between £300 and £500 with an average cost of £400 (Tom's
Electrical Services, 2015). Extra cost from fire could be repainting the affected area
which will cost an average of £232 (Service Magic.co.uk, 2015). Bringing the fire
outbreak restoration cost to a total of £632 average.

I6- Installation Equipment could develop malfunctions

The only equipment that would make a substantial impact on the installation and
finances if it develops faults is the crane-mounted vehicle used it delivering the
panels on to the roof tops. The other equipment used is less likely to be defective
and there would be backup tools as well if there happen to be any case of
malfunctions. But, concerning the cranes, the company will go into a regular
maintenance with a service company. The sum of £4,400 has been budgeted for the
maintenance of four vehicles on a monthly basis.

MSc Thesis 266

P1- Installed Systems could develop unsatisfactory performance

This risk is a low probability risk because the installation teams are qualified and in
any case such risks occur, an installation team will go over to diagnose and fix any
anomalies in order to get the system working. This may only take between one and
two hours costing a maximum of £80 including labour costs and transportation
(Vehicle fuel).

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Appendix I Financial Reports
I-1 Year 1 Trading Accounts
Table ‎10I-1: Year 1 Trading Accounts

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I-2 Year 2 Trading Accounts
Table ‎10I-2: Year 2 Trading Accounts

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I-3 Year 3 Trading Accounts
Table ‎10I-3: Year 3 Trading Accounts

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I-4 Year 4 Trading Accounts
Table ‎10I-4: Year 4 Trading Accounts

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I-5 Year 5 Trading Accounts
Table I-5: Year 5 Trading Accounts

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I-6 Compound Interest at 5% High Yield Bond
Table ‎10I-6: Compound Interest at 5% High Yield Bond

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