INDUSTRYOPINION
Outlook for the UK solar PV market
The solar industry has had an extraordinary year of change in 2011 with a dramatic end that will ensure 2012 will not be a repeat performance. The dust is still settling and the jury is still out on how the year will pan out. Solar UK asked Reza Shaybani, Chairman of the British Photovoltaic Association (BPVA) how the coming year will shape up for the industry.
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t is an oft-cited statement that the Feed-in Tariff (FIT) scheme introduced in April 2010 was a victim of its own success. Between the launch of the scheme in April 2010 and autumn 2011 PV installation costs fell by 30%, return of investments rose to up to 23% and installations were five times greater than expected. The Department of Energy and Climate Change (DECC) have therefore been forced into taking the punch bowl away just as the party is getting started in order to ensure the long term viability of the FIT scheme. Yet there is much to be positive about and, in truth, the solar PV industry in the UK has a bright future.
To start with DECC is finally taking the solar PV industry seriously. Greg Barker MP, Minister of State for Energy and Climate Change, has been keen to highlight to the industry that solar PV is now seen as a serious player within the renewable energy industry. The industry is assured that this stance has buy-in from the very top of the Government. Although the Department’s decision to pursue legal proceeding with regard to the Feed-in Tariff reference date has caused unnecessary uncertainty and tension, the fundamental underlying support provides for a co-operative framework for a good working relationship in 2012 and beyond.
No doubt the future is going to be challenging. DECC has challenged the industry to deploy 22GW of capacity by 2020, but also proposes to cut the Feed-in Tariff to 21p/kWh and continue reducing tariffs through a proposed degression mechanism. Despite this, the 22GW by 2020 is achievable so long as the degression mechanism is well designed and UK solar PV prices come down in line with global levels, which have reduced by 50% in the last 5 years. Installation and manufacturing costs will be a crucial factor in
securing the long term future of the industry, as will the industry’s ability to maintain consumer interest in the sector. Some say that 22GW by 2020 is unrealistic, but in December of 2011 alone Germany installed 3GW; surely the UK can average 3GW per year until 2020?
Future direction
Despite the challenges faced by the industry we must not lose sight of the important factors that are running in the industry’s favour. Unlike other renewables solar PV has broad public acceptance and awareness, it doesn’t require expensive grid connection or reinforcement costs and it can easily be incorporated into the built environment, especially when we consider BIPV and the UK is becoming an increasingly hospitable environment for the solar PV market. Today the market’s infrastructure looks far more comprehensive than just two years ago;
a range of installers throughout the UK, training academies ensuring the skills of the future, distribution networks and suitable financing options can all now be found. This is the foundation of an innovative and dynamic industry.
While solar PV alone has an attractive range of merits, it becomes an even more sensible investment when the alternatives are considered. The constant rises in electricity prices coupled with the falling costs of solar PV prices means that before long solar PV will have achieved grid parity.
If the industry works alongside DECC to generate solutions to lower costs by 2020 solar PV could achieve the position it deserves as a mainstream and important part of the UK’s energy mix.
© 2012 Angel Business Communications. Permission required.
www.solar-pv-uk.com Issue I 2012
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