According to recent NPD Solarbuzz channel checks, supplier surveys, module shipment analysis and updated project pipeline data, the UK is forecast to be the fifth largest PV market globally during quarter one of this year.
In fact, based on new analysis and research featured in the forthcoming NPD Solarbuzz Quarterly report, the market share of the UK will approach 10% of global PV demand this quarter and the UK market will exceed the 0.5GW level for the first time ever in a single quarter.
This has also come amidst a climate that, during the past three months in the UK, has not really been indicative of a vibrant PV industry. In fact, even during the past few weeks, there has been a wealth of conflicting messages that has dominated local news, and has certainly been prioritised over any undue PV euphoria.
ROC and a hard place
To begin with, let’s capture some of the domestic headlines to get a handle on local energy issues from the past few weeks; this may help explain why PV record breaking performance is not being championed by the tabloids.
First, the proposed new Hinkley Point nuclear power station is close to getting the final green light to generate “vast amounts of clean energy”, with discussions between EDF and the UK government moving towards a compromised position over long-term contract strike price levels.
Furthermore, the recent coalition Budget also saw fracking get a somewhat unexpected blessing from chancellor George Osborne, who said: “Shale gas is part of the future. And we will make it happen.” Indeed, it would appear that the UK has latched onto fracking in a similar way to the fascination it has had with tidal energy dating back over several decades.
On the mainstream feed-in tariff-based PV market, data from DECC has also confirmed continued softness in the residential segment, due in part to seasonality (resulting from particularly challenging weather conditions across the UK) and the effects of revised FiTs with a one-way degression mechanism that leaves little scope for any already-depressed PV segment.
And just to compound matters, the summer FiT review phase of calendar year 2013 got rather abruptly shortened from three to two months – a fact that will only see automatic degression-based adjustments accelerated forward by exactly one month.
Ground mount ushers in ‘phase four’ of UK PV
The UK PV industry has been through several phases now as part of its long-term goal to become a key part of the UK’s overall energy mix.
Phase one can be considered as everything pre-FiT. Phase two was the FiT-frenzy period of 2011. Phase three was the fiT-hangover and adjustment phase leading up to the end of 2012. And phase four was ushered in at the start of 2013, driven by a rejuvenated UK ground-mount sector.
It remains somewhat ironic that Renewable Obligation Certificats (ROCs) were originally the intended platform for offshore wind and that DECC’s initial altruistic PV ambitions were to empower low-income households through subsidising PV micro-generation through FITs in combination with other energy efficiency savings schemes. But that’s the past.
Nobody expected PV pricing to be where it is today, and as such we end up in a position where ROCs create a win-win situation for DECC and the UK PV industry, with both ground-mount and commercial rooftop having a stable incentive scheme to 2017. From a global PV perspective, it really doesn’t get more long term than that. It is actually far more valuable in the short term than any renewable energy portfolio aspirations that are underpinned by dates as far out as 2025 or 2030.
Over the past few months, the number of proposals for large-scale, megawatt, ground-mount solar farms has approached 200 and planned installations include accessing ROC levels both pre and post April 2013. Even once we filter out the projects that are highly unlikely to get financed or to proceed, the pipeline remains considerable.
The net effect of all this is that PV demand in the UK can now lay claim to two landmark achievements:
- During the first three calendar months of Q1’13, cumulative PV demand in the UK exceeded the 2GW level.
- Over the same period, PV demand is expected to exceed the 0.5GW level.
In fact, by the end of 2013, the UK should have passed the 3GW cumulative level, and the widely adopted 20GW-by-2020 mantra may indeed become a distinct possibility.
By having a strong ground-mount PV segment driving future growth, the UK has just moved one step closer to global PV industry participation. Globally, the ground-mount segment is forecast to account for over 45% of cumulative global PV demand of 230GW between 2013 and 2017.
It now just boils down to some type of amendment of FiTs that will give the <250 kW rooftop segment a lifeline. Then, the UK could become one of the few countries globally that has a strong and balanced PV industry for small-scale and large-scale, and rooftop and ground-mount.
Getting these changes in place before the national elections in May 2015 could now become the key deliverable from the collective voice of the UK PV industry and DECC. And at this point, phase five of UK PV activities are certainly likely to challenge for headline energy coverage with any future nuclear or fracking announcements from the Treasury.
Finlay Colville will be speaking at the Large Scale Solar UK Conference 24- 25 April 2013, Truro, Cornwall. More details can be viewed here.
In response to the comments below:
Thanks for the questions. Just thought I would clarify to help resolve the questions here.
First, whenever demand is referenced by any analyst, it refers to calendar year not the fiscal year quarters that vary from one country to another. So Q1’13 is strictly Jan to March inclusive.
Next, when you calculate ‘demand’, this is strictly market-demand. Supply/demand analyses are based upon that principle. So registered installations can often lag market demand. A striking example of this could be a 5MW farm that is built at the end of March (qualifies as market demand), but not interconnected until April. Or when registers are updated or changed over time, or categories get altered.
Yes, the UK has flipped from a residential (FIT) rooftop market to a commercial (ROC) ground-mount market, and that is driving the uptick. So anyone looking at FiT registers only is not analysing country market demand but just one data point. The commercial rooftop market is also kicking in, again based on ROC schemes. Adding residential FiTs is just one part of the overall picture today in the UK.
If anyone is coming to the Large Scale Solar event in Truro in April, I will try and explain within my talk there. Or anyone can grab me offline there and I will be happy to explain.
But just to clarify any queries on the data. It is a combination of how you track any market demand (generally) from a supply/demand perspective, and (specifically) the large shift in solar PV demand dynamics happening currently in the UK PV market.
I hope this clarifies!