UK solar must ‘unlock’ commercial market to realise subsidy-free future

The UK solar market must “unlock” deployment on commercial buildings if the technology is to continue its cost-reduction path to a subsidy-free future, the Renewable Energy Association (REA) has claimed.

This morning the REA published its annual Renewable Energy View report, compiled in conjunction with Big Four consultancy firm KPMG and Innovas, which provides an overview of the domestic renewable energy sector and the risks posed by changes in policy.

Hailing solar PV’s record for exceeding expectations as “second to none”, the report discusses the uncertain future the technology faces in the UK given the government’s subsidy reset which has seen the Renewables Obligation and feed-in tariff closed and cut respectively.

With solar all but excluded from future Contracts for Difference rounds, the REA has stressed that for solar to continue to reduce its installation costs it must branch out into previously lacklustre markets.

“In order for solar PV to become attractive without subsidies there is a need to unlock deployment on buildings in the commercial sector,” the report reads.

The UK market has typically been dominated by domestic installations, with utility-scale projects enjoying periods of concentrated deployment under the RO. Commercial-scale rooftops have struggled to live up to expectations historically, however the 50kW+ FiT band remains one of the most active under the new regime.

The industry has however also had to contend with a surge in installation costs since the introduction of the new FiT regime, particularly in the residential band where economies of scale are significantly restricted.

Despite the warning, KPMG chair of energy Simon Virley insists there are still business opportunities in solar.

“It has been a turbulent year for the renewables sector.  But the falling costs of technologies, like solar and storage, mean that exciting business opportunities lie ahead and the sector as a whole can start to move beyond subsidy,” he said.

The report has also sized the UK solar market, stating that the number of those employed across the whole UK solar supply chain reached a high in 2014/15 of 16,880. This comes despite a gradual reduction in the number of active companies, falling from 2,200 in 2011/12 to 2,005 last year.

Sector turnover rose to just below £2.5 billion last year (£2,477 million), however it is widely expected that this – and employment numbers – will fall as the industry continues to contract in the face of falling subsidies.

REA chief executive Nina Skorupska CBE expects these effects to be seen prominently in next year’s report.

“While many businesses have been left reeling and deployment has begun to slow, as an industry we will persevere, we will innovate, and we will continue to grow,” she said.