Solarcentury was one of the solar PV installation companies that challenged the government’s FITs decision in the High Court
Addressing the implications for electrical contractors,
the ECA’s Paul Reeve, says: ‘Many of our members that have gone to the trouble to train and register with the Microgeneration Certification Scheme (MCS) have had to hastily revise their business plans, and some do not trust government to deliver a reliable business environment for PV.’
Confidence boost While the halving of the FIT has made all the headlines, consumers who were considering solar PV might now think that there is a far longer return on investment (ROI) than there actually is. Initiatives such as the Our Solar Britain campaign
will be crucial in promoting the benefits of this technology and restoring consumer confidence. Kamil Shah of Wagner Solar, one of the backers of the Our Solar Britain project, comments: ‘The information on our website demonstrates just how compelling the argument to install solar still is for homeowners in the UK.’ Reeve explains: ‘Even with FITs at 21p per kWh
from March, the rate of tax-free return on solar PV is expected to be favourable. This makes it a potentially attractive option for many installers and customers – but the government must provide a predictable trading environment.’
26 ECA Today March 2012
Initiatives such as the Our Solar Britain campaign will be crucial in promoting the benefits of this technology and restoring consumer confidence
The end game The economics of the market will now determine when FITs will be reduced further. At some point they will have completely served their function of establishing a new market sector in the UK. ELECSA’s Griff Thomas, comments: ‘The end game
is to achieve grid parity – that is, where the overall installation cost and the return on that cost per kWh over a defined period does not exceed the import tariff rate – around 10-13p per kWh at the moment. As installation costs fall and energy prices rise, this grid parity becomes more achievable, and forecasts predict that it can be achieved as soon as 2020.’
Cost effective The price of solar PV equipment has been dropping steadily over the last couple of years, and it is estimated that the impact of the 21p per kWh FIT – and lower – can eventually be countered. Paul Reeve says: ‘The industry needs to do its best to maintain an ROI of 10 years or less. This may mean reducing margins, but the general consensus of opinion seems to be that the reduced cost of hardware will counter the reduced FIT and still make this a profitable sector.’ This is a view shared by Thomas, who adds: ‘PV
components in the UK have a long supply chain, and for every link in the chain there is an added percentage.
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