High hopes for the UK solar market, but what can we really expect?/Act On Solar Energy

Amplify’d from www.solarpowerportal.co.uk

High hopes for the UK solar market, but what can we really expect? Posted in Blogs by Emma Hughes Published on 18 May 2010 Updated on 18 May 2010 C21e and C21t tiles, Rotherham, South Yorkshire Housing Association (Solarcentury) Now that April 1st has come and gone, all eyes are firmly focused on the UK renewable energy market. With a strong feed-in tariff provided generously by the UK’s Department of Energy and Climate Change (DECC), which pays 41.3p/kWh of solar photovoltaic energy generated, everyone is eager to see whether the amount of solar installations in the country is really going to be as high as hoped. Householders who install small-scale solar panel systems in the UK are now eligible to receive up to £1,000 a year, tax free for 25 years, for the electricity they generate under the new government Clean Energy Cashback scheme, or feed-in tariff (FiT). This means that any UK resident who installs a typical 2.5kW PV system will initially be paid 41.3p/kWh generated earning them up to £900 in the first year on top of a £140-a-year saving on energy bills. Sounds great – where’s the catch? Well, unfortunately, although there is a nice financial incentive to drive the uptake of PV in the UK, there are a few things that still need to be ironed out before the market really takes off. A high price to pay Although the FiT is charitable in its payouts, the initial cost of a solar installation could cancel the generosity out. On average a UK solar customer will spend £8, 000 – £12,000 on the initial installation, which is of course is more money than the majority of us have lying around. Banks and investment companies are jumping on board the renewable energy bandwagon, and will soon be offering low interest loans to cover the initial cost, yet before these are available it is expected that the UK solar customer base will be made up of the wealthy and the retired. The Department of Energy and Climate Change (DECC) claims that the initial cost is justified by the rate of return on investment (ROI), which it claims is 5 – 8% on a well sited 2.5kW installation. It also claims that a UK solar customer could earn up to £1,000 a year, meaning that their initial costs would be earned back in a maximum of 12 years. Considering that a solar system usually has a lifetime of 25 years, the owner is then earning up to £1,000 a year for an extra 13 years. That is a profit of approximately £13,000. Bargain. But where? Assuming the funds are available for solar installations in the UK, the question remains, where will it be installed? UK installation company Solarcentury, which has installed many UK-based residential systems, has reported a fourfold increase in sales enquiries since the FiT was initially announced in February. So we can expect a fairly large residential market.  Yet residential roofs aren’t that big, and so many may will not produce enough power a year to earn the customer the expected ROI. So, who will? Well, according to early signs, the farmers will. The large size of the farm buildings means that farmers are far more likely to earn back the ROI, as they will host a much larger system. Jonathan Scurlock, Chief Adviser, Renewable Energy and Climate Change at the National Farmers' Union said, “For many farmers and landowners it now makes environmental and financial sense to consider installing solar PV on farm buildings.” This parallels the leading German market, which has a successful residential installation rate, but it is the farm building rooftops that hold the most PV in the country. As the UK market is so infantile, there is also a lack of available products in the country. Modules are thin on the ground, and the ones that are available are very expensive. The same goes for inverters. This situation is expected to change once the market cools down in Germany, which is currently experiencing a solar boom (they’re cutting their FiT on July 1 so everyone’s rushing to get the best rate now) and also when the market begins to grow in the UK, the products will come where they’re needed.  All that remains now is to make sure that the installers, suppliers and importantly, customers, have the right amount of solar education. At the moment many people in the UK are unaware of the benefit of the FiT, and so don’t really see solar as an option. They are not alone. Installers in this country are also restricted in their industry knowledge as the information out there is limited. As the DECC and others begin to publish more educational documents the UK’s light bulbs will switch on and the solar market will grow. Independent solar expert Michael Pitcher from associate consultancy, BFC Solutions, said, “Countries like Germany and Belgium have embraced PV and are already reaping the rewards, but solar panels perform very well in the British climate so there’s no reason why the UK shouldn’t also harness the benefits of solar energy,” he said. Read more at www.solarpowerportal.co.uk

 

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