UK solar market shifts, shows further signs of recovery

The most recent monthly installation figures from the Department of Energy and Climate Change (DECC) suggest that the UK solar industry is finally recovering from the disruption experienced at the beginning of this year.

Since April many have been concerned about the dip in installation figures as weekly CFR numbers fell from 20,000 in the first week of March down to just 892 in the first week of April. This situation can be attributed to many factors, including the reduction of feed-in tariff incentives from April 1, the introduction of new EPC requirements and consumer confusion.

However, despite these setbacks, the market seems to be recovering. Earlier this month the Solar Power Portal reported that the figures for the last few weeks of May and opening of June were actually higher than those recorded in the same period the year before, despite the fact that the feed-in tariff rates were twice as high at 43.3p/kWh in 2011.

This recovery is also evident in DECC’s monthly feed-in tariff statistics, which show that at the end of May 2012 solar photovoltaics represented 92 percent (1.1GW) of the total installed capacity, and 99 percent (273,908) of all installations under the feed-in tariff scheme.

In fact, during the month of May 2012 there was an increase of 6 percent in total installed capacity and 5 percent in total installation numbers on the previous month. More than 66MW of installed capacity across 14,039 installations joined the scheme, which is 3.9MW more than in April 2012.

Commenting on these statistics, Jan Jacob Boom-Wichers, Managing Director, France, Benelux, UK and Ireland, for REC Solar, said: “We are pleased to see that the UK market is slowly stabilising after the sharp drop in installations in March 2012 when the new support scheme took effect. We believe that the DECC degression model supports sustainable growth for the UK solar market as it delays cuts in FiTs if demand is lagging.”

“To meet the 22GW solar target in the UK by 2020, current levels of PV deployment will have to increase. We believe market growth could be stimulated through net metering in addition to longer-term visibility for solar customers and suppliers. We will continue to work with distribution partners and installers to make solar more sustainable in the UK,” he continued.

While the figures quoted for the last months show a slow down in the amount of installations coming online the residential sector remains most prominent. During the week ending June 17 a total of 1, 833 systems were installed, 1,787 of which were in the 0-4kW bracket. Only 17 were completed in the 4-10kW bands with just 29 of 10-50kW in size.

However, while small-scale solar has sat on top since the beginning of the feed-in tariff scheme, industry experts suggest that the market may be about to shift.

Solar installation company EvoEnergy claims that it is currently busier than it has ever been in the commercial sector. In fact the company took orders of two million pounds last month for commercial-scale projects.

Gary Sucharewycz, EvoEnergy’s Commercial Sales Manager, said: “A lot of people felt when the feed-in tariff rates were cut by 50 percent that solar was dead, but in the past year the cost of installing a solar power system has dropped by around 60 percent, which means the returns are still attractive at around 12 percent.

“Financial directors have recognised this and are really now seeing the benefits of investing in solar energy to cut high energy costs and generate income.

“We’ve never seen so much interest from businesses. Demand has been strong from contractors, from farmers, from the public sector and right across industry,” he added.

There is also expected to be a great amount of large-scale solar adding to the figures under the ROC mechanism.

The Solar Trade Association’s PV Specialist, Ray Noble, said: “There is a large amount of ground-mounted solar projects going ahead in the UK. Many have already begun work on site ready for completion by the end of March 2013. I expect anything from 600MW to 1GW to be built by this date.”

However, Noble notes that these installations are the “low hanging fruit” which will have been in the pipeline since last year when the feed-in tariff was abruptly cut for the larger projects. Industry is now concerned that DECC will cut the amount of ROCs large-scale solar is eligible for when the review of this scheme takes place later this year.

In response to these concerns the Solar Trade Association is now calling on Government to keep the existing two ROCs for solar at the same level after April 2013.

“The industry has responded to what was thought to be an impossible challenge of making solar energy work with two ROCs and have made it work. However industry needs two years of stability with ROCs in order to grow the industry to a level that will reduce prices still further in the future and allow Government to start reducing the ROC contribution at a gradual rate going forward.

“Any severe cut in ROCs will in effect stop further ground-mounted development and will once again impact on investor confidence. With solar now incorporated into the Renewable Energy Roadmap I don’t think this is too big an ask if Government is really committed to a mix of technologies that will keep the UK powered into the future,” Noble concluded.