As the UK solar industry moves closer towards the announcement of the latest feed-in tariff consultation, many installers are becoming increasingly concerned that consumers have lost interest in the technology. With energy bills continuing on an upwards trend, and the recession going back for another dip, is there hope for UK consumers out there?
Last week UK energy news focussed on price rises. The International Monetary Fund (IMF) was warned by its internal research team that there could be a permanent doubling of oil prices in the coming decade with profound implications for global trade, while Centrica warned on Friday that the trend for retail energy costs “remains upwards.”
“UK wholesale gas costs are around 15 percent higher for next winter than last, and non-commodity costs – which are also largely outside of our control – are expected to add a further £50 to the cost of supplying the average household this year,” Centrica said in a statement.
Also last week it was reported that three-quarters of customers who have signed up to The Big Switch, launched by consumer group Which?, will save a “disappointing” amount on their energy bills.
The Big Switch aimed to use the collective bargaining power of nearly 300,000 consumers to negotiate cheaper energy tariffs by effectively bulk-buying on behalf of the group. However, critics have pointed out that the winning tariff is actually more expensive than the cheapest already available on the market.
“The Big Switch was a brave and bold move, but the outcome is disappointing,” said Ann Robinson, Director of Consumer Policy at uSwitch.com.
A ray of good news
In contrast to these negative announcements, E.ON has today promised not to introduce residential price rises in 2012. Currently supplying approximately five million domestic customers in the UK, the energy provider wants to provide a “fair and transparent” service.
Dr. Tony Cocker, Chief Executive of E.ON UK, said: “Let me be clear, E.ON will not raise residential prices in 2012. I want every family in the UK to know that we will always do our best to be fair and act in the best interests of our customers. Earlier this year we cut our prices in a way that helped some 75 percent of our customers and I hope that the certainty we’ve given today will show our customers again that we are committed to helping them, and I also hope that it will help to show millions more that if they look to switch they can find in E.ON a company that puts its customers first.
“Unfortunately global energy markets are expected to see an overall trend of rising wholesale prices but as a company we believe in acting fairly, which means cutting prices when we can and never raising prices unless absolutely necessary. We will continue to spare no effort in getting our customers energy fit by insulating homes, installing smart meters and providing advice that makes a real difference. That help and action, combined with the price cut announced in February and the promise we've made today, mean that E.ON customers can plan for the future and properly control their energy costs, as well as reducing their consumption.”
What does this all mean for PV?
While E.ON has revealed its intention to effectively freeze domestic energy prices in 2012, consumers will likely remain wary of the future. After all, British Gas instilled confidence in its customers by announcing a 5 percent cut in its standard electricity tariff in January last year, only to follow up with a 16 percent increase in electricity prices and 18 percent rise in gas prices for customers in August 2011.
It seems that no matter how much juggling these companies do, or how hard they try to offer customers the support they need in these times of austerity, prices are not going to decrease any time soon. Oil and gas are only getting more expensive, and this will in turn have a knock-on effect on bills. As a result of this gloomy reality, some UK consumers are turning to renewable power, as they can then generate and consume their own energy – and not rely on the Big Six.
Paul Barwell, STA Chief Executive, explains: “The increase in conventional energy costs is not a blip, but an ongoing upward trend – Centrica is unlikely to be the only supplier to increase energy bills due to the rising costs of wholesale gas. In contrast, the costs of solar power have dropped dramatically in recent months.
“Generating your own electricity from solar panels not only protects homeowners against ongoing fossil fuel price hikes, but, with the feed-in tariff, actually provides a healthy return on investment as well – not to mention the benefits for the environment and our energy security.”
Gaynor Hartnell, REA Chief Executive, continued: “It seems inevitable that the long-term trend in energy bills is upward. The main driver for this is increasing gas and oil prices, but the need to decarbonise and replace ageing infrastructure will have some impact too. Householders as well as businesses will want to protect themselves against this. Producing their own renewable energy, as well as improving insulation and the efficiency of their energy use, is becoming increasingly attractive.”
And, many UK consumers are beginning to realise that renewable energy is indeed a way forward. According to solar company Eco Environments, the interest in solar PV, energy efficient lighting, heat pumps and other forms of renewable technology has increased since the news that renewable energy can help to reduce bill costs spreads.
David Hunt, a Director with the company, said: “Although there is the occasional small price drop, the trend in energy costs is very definitely upwards. As a result, we are seeing an increasing number of homeowners and business owners looking to address their energy costs. The summer months are the best time to do this in order to avoid nasty shocks when the winter bills arrive.
“One of the most popular options at the moment is low energy lighting but there are a range of renewable energy technologies that people can harness to ensure drastic reductions in energy costs.”
Furthermore, even if consumers aren’t able to harvest their own energy, they can do so from alternative sources, such as renewable energy suppliers.
Juliet Davenport, Founder and CEO of Good Energy, the UK’s only 100 percent renewable electricity provider, explained their point of view: “Good Energy is really proud that we’ve been able to keep our electricity prices stable for the last three years and currently have no plans to change them. Our research shows that 57 percent of the fuel used to generate electricity in the UK is imported from abroad. We need more British renewable energy, which is much better for our energy security and will help keep bills down in the future.”
Good news doesn’t travel fast
However, while some consumers are realising how renewable energy can help to reduce their energy bills, more needs to be done to spread this good news. Unfortunately many are hung up on negative messages that have been churned out by the mainstream press, with a disappointing amount believing they have missed the boat. I’ve been speaking with members of the public over the past weeks and the message they are receiving is that Government has killed solar, and it is no longer a viable option in the UK. Yet when the reality of the situation was outlined to them, many were still interested in installing the technology.
“I think we need to get potential customers to understand electricity is going up significantly faster than inflation and with all the troubles in the electricity supply industry, customers have the opportunity to protect themselves from a significant part of these future price rises. The FiT was designed to raise awareness of solar energy and to stimulate a market. Now that has been accomplished we need to push the message that no matter what level of FiT is available, solar is worth having as a contribution to reduce future electricity prices,” explained Ray Noble, PV Specialist with the Solar Trade Association (STA).
“Solar is the fastest growing energy industry in the world and it offers everyone to be in the electricity generation driving seat while protecting themselves from the severe price rises in the future,” he continued.
Meanwhile the Department of Energy and Climate Change told me: “We can’t control global gas prices, but we can help consumers control their bills by shopping around for the best energy deal in the market and by taking energy efficiency measures such as loft and cavity wall insulation – which the Government requires the big energy suppliers to help households with and provide free to some of the most vulnerable consumers.
“In the longer term the Government’s energy policies, including the Green Deal starting later this year and fundamental reforms of the electricity market due in the Energy Bill announced in Queen’s Speech, are designed precisely to make sure that UK homes and businesses are better shielded from the sort of international gas price hikes that we’ve seen hitting UK consumers over the last year or so, by cutting our reliance on imported gas, nurturing a wider mix of home-grown low carbon energy sources, and cutting energy waste.”
So it seems the solution is out there. Solar PV is still a viable technology and can help to reduce rising energy bills. Government is supporting this move, and the informed consumer welcomes it with open arms. It is now up to the industry to make sure the message gets out there before it is too late.
