Large Scale Solar UK Conference

Latest solar installation figures: finally some good news?

The latest solar installation figures appear to show that the UK solar market is finally stabilising. After weeks of concern surrounding a significant dip in demand the numbers released today by the Department of Energy and Climate Change (DECC) seem to show that the market may be starting to get back on track.

Back in April this year Government introduced stringent new EPC legislation combined with a 50 percent drop in the feed-in tariff level, which combined with the resulting influx of scaremongering press led to yet another dramatic artificial spike in installs, which was to be followed by a sharp dip.

In the run up to the March 3 reference date a total of 9,049 installs were registered as consumers rushed to go solar before the changes went through. The week after saw installations drop by over 90 percent to just 885. Since then, install rates have slowly climbed back to between 1,500-2,000 installs per week.

The table below compares the latest figures to those of the same period last year:  

10 April 2011

1,629

08 April 2012

885

45% decrease

17 April 2011

1,674

15 April 2012

925

44% decrease

24 April 2011

1,541

22 April 2012

1,496

3% decrease

01 May 2011

1,136

29 April 2012

1,589

40% increase

08 May 2011

1,372

06 May 2012

1,795

31% increase

15 May 2011

1,627

13 May 2012

1,666

2.4% increase

22 May 2011

1,859

20 May 2012

2,156

16% increase

29 May 2011

1,978

27 May 2012

2,186

11% increase

05 June 2011

1,701

03 June 2012

1,788

5% increase

As the table illustrates, 2012 installation rates are actually on average higher than the equivalent rates in 2011, despite the fact that the feed-in tariff for the latter period was more than 50 percent lower.

The latest installation figures should provide industry with some much-needed confidence after extensive negative media coverage, the introduction of EPC requirements and the overhaul of the FiT system led to installation levels stagnating for a period.

Comparing 43.3p/kWh to 21p/kWh

Industry has fought a long (and often bitter) battle with DECC ever since the department announced its intention to cut the FiT rate in half. DECC stated that such a dramatic cut was necessary to match the collapse of PV costs. Industry maintained that such a swingeing cut, delivered so quickly would strangle the industry at birth.

In order to make a fair comparison, figures from April-June 2011/2012 have been used. The rational between selecting these two reference points is that both periods should be independent of any artificial spikes caused by impending FiT reference dates. The periods also allow an unbiased comparison as the ROI available should be roughly similar – as component costs and eligible FiT rates have both fallen by 50 percent since the 43.3p rates were available.

10-Apr-11

1629

08-Apr-12

885

17-Apr-11

1674

15-Apr-12

925

24-Apr-11

1541

22-Apr-12

1496

01-May-11

1136

29-Apr-12

1589

08-May-11

1372

06-May-12

1795

15-May-11

1627

13-May-12

1666

22-May-11

1859

20-May-12

2156

29-May-11

1978

27 May 2012

2,186

05-Jun-11

1701

03 June 2012

1,788

12-Jun-11

2040

(TBA)

 

The table appears to suggest that under 21p/kWh, the market is reacting in exactly the same manner it did when the higher 43.3p/kWh was on offer last year. 

Are current levels sustainable?

Back in February this year the Minister Greg Barker’s perfunctory tweet outlined an ambition to see 22GW of solar installed in the UK by 2020. This resulted in much noise from the UK solar industry, some positive, some negative. Since then, DECC’s press department has worked tirelessly to stress that 22GW is just an ambition and not a stated target. Accordingly, DECC’s latest impact assessment has downgraded the projected deployment level from 22GW by 2020 to just 11.9GW by 2020 – its important to here that the higher projection remains at 22GW.

Under the new FiT cost control mechanism, DECC estimates that from April 2012-13, 800MW of <50kWp capacity will be installed in the UK. That works out to around 15MW of capacity installed every week. The table below illustrates the current rate of capacity installation:

Date

Capacity installed (kWp)

08 April 2012

2,566

15 April 2012

2,657

22 April 2012

4,633

29 April 2012

5,080

06 May 2012

5,849

13 May 2012

5,560

20 May 2012

7,378

27 May 2012

7,653

03 June 2012

6,409

As the table illustrates, industry is currently installing at half the rate that DECC has predicted.

The seasonal growth in sales should help stoke demand over the summer months, last year installs in the summer peaked at 11,107kWp per week. However, a dramatic rise in installation levels will still be required to support the number of MCS registered installers. At the moment it is not clear where such a rise in demand could come from.

Responding to the latest figures, Chief Executive of the Solar Trade Association (STA), Paul Barwell said: “We have been monitoring deployment very carefully. We're now fairly confident that the UK PV market is on the road to recovery.

“This steady climb in deployment – which will see a minor blip next week owing to the Jubilee weekend – is a sign of a stable and sustainable future for the UK PV sector. Consumers are getting the message that returns are as good as ever and the feed-in tariff is finally stable.”

STA PV Specialist, Ray Noble added: “The previous peaks and troughs were of course not sustainable.

“The feedback we are getting from industry is that deployment will continue to rise. We need to increase present deployment to a steady rate of 21MWp/week in order to achieve Government’s expected annual deployment of 800-1,000MWp.”

Where are things headed?

Clearly, the UK solar market needs to grow further in order to support both industry’s and Government’s stated ambitions. The introduction of DECC’s degression model should serve as the necessary foundation for the industry to build a growing market upon. Under the new mechanism, if demand is severely lagging behind predictions then planned cuts to the FiT will be delayed until the market hits the necessary levels.

The introduction of a capacity trigger degression model should signal the end of fast-track reviews and continued periods of uncertainty; Greg Barker’s fabled “end of boom and bust.” Industry will be made aware of any impending cuts two months before they are implemented. Furthermore, basic analysis of market data should allow companies to accurately predict tariff rates moving forward.

The renaissance of large-scale solar in the UK will also play a significant role over the coming year. Significant cost reductions at scale combined with the available ROC funding have led to a large increase in >50kWp proposals. Combined with a successful domestic market, the outlook for solar in the UK during 2012 could be bright.

 

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