Major US residential solar installer SolarCity has shed light on its decision to withdraw its subsidiary Zep Solar from the UK market.
In an interview with Solar Power Portal Marco Krapels, senior vice president of strategy at SolarCity, said that the company had evaluated the UK and came to the conclusion that in the wake of a reduced feed-in tariff, it “just doesn’t economically make sense” for SolarCity to be present in the market for the immediate future.
“We can achieve much better IRRs for our investors in other countries where solar intuitively makes a lot of sense,” Krapels added.
SolarCity’s R&D and mounting systems subsidiary Zep Solar entered the UK market earlier this year, establishing a base in Milton Keynes from where it hired a team of six people as it looked into launching its offering in the UK as part of a global expansion.
Krapels explained that this was triggered by the group’s acquisition of Mexican installer Ilioss and that the group sought to leverage its assets and access to financing to move into other markets which could provide attractive IRRs.
Given its status in the US and backing from Tesla-founder and renowned entrepreneur Elon Musk, SolarCity would have been a strong contender to be a dominant player in a future UK market.
However the company has since shelved plans to launch in the UK and closed its Zep Solar UK office. Of the six staff employed at the firm, it’s understood four have been made redundant and two have been found positions elsewhere.
“In the absence of feed-in tariffs and a net metering policy, I think it’s very difficult when you have a country that doesn’t have a lot of sun hours. It’s just very hard, economically, to make it work,” Krapels said.
But Krapels was quick to point out that the UK had done a “great job” in expanding solar in the past, and hinted at a possible return in the future.
“[Solar] is good for the economy, it’s created thousands of jobs and I think it’s good for energy price stability…I really do hope the UK continues to expand and create a regulatory runway where it is attractive for companies like ourselves or others to enter the UK market,” he added.
While Zep Solar has now shuttered its operations, Krapels lauded the work the unit had achieved in researching new installation techniques and technology on UK rooftops, which he noted were now being used in other international markets.
“The beautiful thing about the UK is that you have all these different rooftops, such as town roofs. We can do two-three homes a day now with the same crew, and we can do a large commercial building in less than two days. That's unparalleled,” he said.
SolarCity became the second big international solar installer to back away from the UK market in the wake of proposed cuts to the feed-in tariff after SunEdison announced it was to “de-emphasise” the UK, prompting the sale and subsequent administration of its UK installer subsidiary Mark Group.
Investor confidence in the UK’s clean energy sector has taken a battering against the backdrop of numerous cuts to support frameworks since the Conservative Party’s general election victory in May. EY demoted the UK to outside the top 10 in its Renewable Energy Country Attractiveness Index for the first time in its history in September, and Scottish energy minister Fergus Ewing told SPP earlier this month that he’d been told of hundreds of millions of pounds of investment being withdrawn from the UK as a result.
Energy minister Andrea Leadsom was grilled on the topic by the ECC select committee earlier this week, and the committee has launched an inquiry which is accepting evidence until next Monday (26 October).