Feed-in tariff down, module prices up

The most popular feed-in tariff bands (0-4kW, 4-10kW & 10-50kW) will be cut by 3.5% across the board come 1 July.

Not only is the date of the degression a month closer than the industry had planned but it’s also following reported module price rises across the UK supply chain.

In the latest issue of Solar Business Focus UK, Gertjan Van der Goot from CompareMySolar.co.uk explored the current module pricing trends in the UK. He wrote:

According to wholesalers, in recent months prices for Chinese panels have gone up by around 10-15% (about 5 pence per watt), although larger increases of up to 25-30% are not unheard of (about 10 pence per watt).

This is driven by a ‘safety margin’ imposed by the company that imports the solar panels, since they are the one that would be liable for retrospective tariffs, and cannot retrospectively go back and get more money from their customers (installers) or the end user (consumers).

Surprisingly, it is not just the Chinese manufacturers that are increasing their prices, but also the Non-Chinese suppliers that look to improve their profit margin and keep their relative (premium) pricing against Chinese panels intact. According to Ben Robinson from DulasMHH: “The premium Korean and Japanese brands have not moved much so far, but are beginning to increase their prices to keep their relative position versus Chinese manufacturers. In the coming months prices will become stable, but in the short term they are expected to increase.”

Solar installers are hence faced with price increases of around 5-10 pence per watt, or around 200-400 pounds for a 4kWp system.

The combination could prove to be a significant challenge to installers.

The residential solar market has struggled to grow with any real pace since the Department of Energy and Climate Change (DECC) introduced the tri-monthly degression method. Finally though, it appears that the market has got up a decent head of steam: the latest solar installation figures for the week ending 28 April show that the market has broken the 9MW barrier after passing the 8MW mark at the beginning of the month.  

So how will the upcoming drop in FiT rate impact on the installation levels?

Let’s take a look at what happened last time the 0-4kW band was cut by 3.5% back in November 2012.



No. of installs

28 October 2012


04 November 2012


11 November 2012


18 November 2012


25 November 2012


As the figures above show, the run up to the FiT change allowed industry to create a ‘call to action’ that convinced potential customers to purchase solar – peaking at 13MW a week in the build up to the rate change.

The figures demonstrate how successful selling against a looming FiT rate drop can be – after all, the rate was only reduced from 16p to 15.44p, hardly on the scale of the 50%+ cuts of the past. 

Looking at the looming cut in July, industry can reasonably expect demand to be even higher than that experienced in late October. After all, solar experiences seasonal demand which should be peaking in June and July.

The combination of the ‘beating the cut’ sell and the traditional summer spike in demand should make for buoyant market conditions.

(To be clear – I am not an advocate of using any cut to the FiT as a call to action for selling solar. You can read my thoughts on that issue here.)

However, there remain a number of market externalities that make predicting how the solar industry in the UK will perform over the next few months challenging. Chief among them is the European Commission’s investigation into alleged dumping and illegal subsidisation of Chinese-manufactured solar equipment.

Despite some rumours otherwise, it looks like the solar industry won’t know the outcome of the investigation until the EC publishes its provisional measures, due by 5 June at the latest.

With module prices rising in order to cover any potential retrospective duties, installers will find selling solar more challenging. However, even with price increases of around 5-10 pence per watt – the numbers still add up for potential customers and, as I pointed out in a previous blog, solar in the UK is more compelling than ever not to mention the most popular renewable technology among the public. The next quarter should provide those in the residential sector a great window of opportunity to go out and install significant solar capacity.