Latest installation figures show continued solar industry malaise

The latest installation figures revealed by the Department of Energy and Climate Change show that the UK solar industry is struggling to return to levels it was operating at before fast-track cuts to the FiT were implemented.

Since tough new regulations and a significantly reduced FiT rate were introduced on April 1, installations appeared to have flatlined at around 1,000 a week.

From April 8 to May 6 just 3,839 new solar arrays were registered, an average of 132 per day. The lacklustre installation figures mean that the UK solar industry added just 15MW of capacity to the national grid since the introduction of the April measures. Worryingly, only 101 >4-50kW installations were recorded over the period, just 65 of which were sized 10-50kW.  

The graph to the right charts the progress of installation levels during 2012. Following the December 12 reference date installations dropped by over 90 percent. However, installation rates began to recover steadily as soon as January 15.

In contrast, since March 3 and April 1 reference dates have passed, solar installations appear to have stabilised with no signs of upward growth.

In order for the UK to reach Greg Barker’s publicly stated aim of 22GW of installed capacity by 2020, installation rates need to pick up significantly.

If we assume that half of all capacity installed in the UK will be >50kW then industry would have to install 115MW of <50kW every month until 2020 to hit 22GW. That totals 28.75MW installed every week. Currently, the UK is installing at an average of 3.5MW a week since the cuts were introduced – just 12 percent of what is required.

The July cuts

As industry is painfully aware, DECC is set to finalise FiT rates for the future in the next fortnight. The announcement will include a new, lower FiT rate that will be effective from July 1.

DECC’s rationale behind slashing the FiT rate once more is that the scheme was only ever intended to provide a return on investment between 5-8 percent for well located arrays. At 21p, a solar array installed today will provide a better return than that, therefore DECC believes it is justified in reducing the rate once more.

However, it is not clear what the effect of the apparent stagnation in installation figures will have on DECC. The rambunctious Cut Don’t Kill campaign is ambitiously calling on DECC to halt the planned cuts, pointing to the installation rates as proof that its policies have gone too far, too fast.

It appears that DECC has been presented with an opportunity to prove its support for the UK solar industry with its upcoming FiT announcements. According to installation levels, DECC should be announcing a new FiT rate of 15.7p. However, those of us that can still maintain a semblance of optimism believe that the current market situation calls for DECC to better incentivise the market by announcing a FiT rate of 16.7p or indeed keeping the rate at 21p. Only time will tell, and in the mean time solar installers need to find ways of getting the market going again to avoid further job loses.