point of sale finance evolves

By Mark Williams
Head of UK Sales
August 2017

Change ahead: point of sale finance evolves for renewable energy

Everyone wants to save money on their outgoings, right? Be it the regular big shop at the supermarket, the mortgage or the cost of their general insurance. In the late noughties a new way to save money came to the fore – domestic energy saving products. These appealed to a range of consumers, the majority of who needed the convenience of paying by finance due to the typically high value of the product.

In less than 10 years the UK has seen significant growth in usage of renewable energy, a sector endorsed by the Government through the introduction of financial incentives for those looking to generate their own energy. In using renewable energy, we reduce our reliance on the national grid and in turn contribute to the global initiative to reduce our carbon footprint. There are many health and economic benefits to ‘going green’.

Solar PV (photovoltaic) generates energy from the rays of the sun. To encourage renewable energy up-take, the government initiated Feed-In Tariffs (FITs); the individual earns an amount, even for energy they consume themselves. The FITs scheme was approved under the energy act of 2008 and went live in 2010. This scheme was applicable for Solar PV as well as less widely used wind, hydro and biomass generators. These low carbon systems didn’t come cheap and point of sale finance lenders saw a surge in appetite for their finance products; not many consumers had £10k or so lying about after all.

Average household energy bills doubled between 2004 and 2011 which added fuel, excuse the pun, to the fire. Recently announced, big providers are looking to implement price increases, despite the very competitive nature of the market. Feed in Tariff payments have reduced on an almost annual basis; governments realised they were going to exceed the budget allocated. Remember, FITs payment is index linked and guaranteed over 20 years. Currently, FITs payment is 10% of what it was when launched. The appetite to buy certain technologies may have dropped recently but the broader renewable energy market remains buoyant with the continued backing of the powers that be. Only last month Ofgem announced new rules will make it easier for people to generate their own power with solar panels, store it in batteries and sell it to the National Grid.

The renewable energy market has evolved dramatically with technology improvements. Energy generation technology such as air source & ground heat pumps (perfect for those off grid), hybrid boilers and storage facilities have moved on quickly in recent times. The emphasis to buy may have shifted towards a focus on saving energy rather than generating significant cash payments (though you still do if you bought a system several years ago) but the market shows no sign of waning.

Point of sale finance providers need to keep up with the times too. We need to understand the market and move with it. We need to make sure retailers have access to the right finance products so that consumers can make this considered and long term purchase affordable. The renewable energy sector has morphed, technology has advanced. The rules of engagement in the finance industry remain; we need to help retailers to help their customers - removing the budgetary constraints of harnessing renewable energy with responsible payment options that are convenient and suitable to their needs. In doing so we’ll continue to reduce the burden on the planet’s already depleted natural resources – not something you get when financing a TV!



Get in touch @ www.ikano.co.uk/retail-finance/contact-us