UK residential market on course for second lacklustre quarter

The UK residential solar market looks set to report further lacklustre deployment under the new feed-in tariff regime.

The sector is currently operating in FiT Term 2, which runs from 1 April to 30 June with a maximum deployment cap of 49.6MW. This cap was however increased to 76.96MW due to underused capacity from T1 being carried over.

Last Friday industry regulator Ofgem confirmed that as of 10 May 2016 the industry had deployed 9.924MW of solar under the residential <10kW band. An extrapolation of current deployment trends suggests that the industry will finish T2 having deployed between 23.5 and 24.5MW, approximately half the mandated cap.

Such deployment would mean that a significant amount of unused capacity would be again carried over to the next term, running from 1 July to 30 September 2016. If deployment totalled 24MW it would result in the T3 deployment cap totalling more than 100MW.

It would also result in total solar deployment under 10kW in size for the first six months of the year of around 45MW. In comparison, deployment under the same bands for H1 2015 stood at 222MW, equivalent to a collapse of around 80%.

The figures seemingly contradict energy minister Andrea Leadsom’s claims in the House of Commons last Thursday that domestic solar deployment remained “strong” under the new regime.

Leadsom was quizzed on the subject by Labour MP Helen Hayes who urged the minister to acknowledge that the new tariff is too low and labelled the current government’s approach to solar PV as “disastrous”.

The minister countered, stating: “It’s [solar] been a huge success story and as I say, our subsidy regime takes into account the interests of the consumer, who has to pay it, and the developer, who is continuing to build. As I say, some caps have already been met and others are performing strongly,” she said.

The Department of Energy and Climate Change has however retained the power to intervene and make changes to the new regime under what it has termed a budget reconciliation clause.

The new regime was designed to spend the total allocated funding of £38 million over the course of the next four years. Should it stand to be under-spent, the department can redistribute funding through “deployment cap top-ups” and “additional support”.

Solar Power Portal questioned DECC on when it might first look to intervene last month however a spokesman said its position had not changed with regards to when a review might take place.