Is free solar distorting the market?

There remains an uneasy relationship between ‘paid-for’ and ‘rent-a-roof’ solar developers.

Inevitably, whenever the Department of Energy and Climate Change publishes the latest weekly installation figures a section of installers calls foul. Their argument is that the figures aren’t representative of the market because the amount of free installs distort the numbers

To compound matters further, DECC doesn’t distinguish between free and paid-for installs meaning that gleaning this information from the traditional sources is impossible. However, sources close to Solar Power Portal estimate that around 60% of all the 0-4kW installs are free.

If this is true then the there is a clear division of potential market size for the two sectors. Hypothetically, if we assume the 60% figure is broadly correct, the size of the markets based on the latest figures would be:

  • Free solar: 3.33MW
  • Paid-for: 2.26MW

A market of around 2MW a week leaves (very) approximately 750 installs a week for the paid-for crowd – that’s nowhere near enough to support the current number of installers.

However, there appears to be a growing sense of resentment towards free solar operators, especially among paid-for installers. Detractors believe that the free solar companies took advantage of the feed-in tariff scheme; hoovering away all the allocated support and forcing the government to intervene – sending the market into disarray. Others resent the companies’ model, seeing it as unfair competition. And they might have a point: how do you compete with someone literally giving away the same product for free?

I don’t think it is that clear cut.

In marketing parlance, buying solar is a ‘high-involvement’ purchase decision. The relatively high financial commitment and long-term investment nature of solar PV means that potential customers spend more time researching and evaluating the benefits of solar before committing to the purchase.

But the ‘high-involvement’ model is equally applicable to free solar ‘purchases’, perhaps even more so. The old adage, if it’s too good to be true it probably is means that customers investigating free solar need plenty of convincing. People are intrinsically suspicious of anyone offering something for free and so will research the company’s business model and reputation extensively before deciding to ‘purchase’ a system. 

My point here being that customers considering free solar, in the vast majority, can’t afford the up-front cost required by paid-for solar installers. Those that can would have investigated the free solar company’s business model and worked out that purchasing the panels themselves would provide a far greater benefit. In short, I don’t believe that the free solar market eats into the paid-for market in any significant way. In fact I see the two as symbiotic.

As John Wade, technical director for the UK’s largest free solar operator, A Shade Greener, told Solar Power Portal: “In our opinion, if it wasn’t for free PV and the enormous national coverage it received from the media, paid-for solar would not have been anywhere near as popular as it has been…those critics have benefitted from that popularity.”

The popularity and public awareness of free solar has driven new business opportunities for paid-for solar installers. The customer bases for the two types of businesses are dramatically different, meaning that all solar installers would benefit from each other’s successes.

We are all in this together and, with the amount of external forces placing pressure on the UK solar market, now is the time to work together to promote the UK solar industry as a whole.