Industry analysts, Solarbuzz, have today released a report on the UK PV Market 2010, which outlines how the solar photovoltaic feed-in tariff program introduced by the UK government in April 2010 has flung the country into the mainstream of global PV market activity. According to the results of the Solarbuzz report, the UK's market entrance could not be better timed, when taking into account the uncertain prospects for the dominant German market next year (due to looming feed-in tariff cuts).
While the report leans towards the positive aspects of the burgeoning UK solar market – mentioning the generous 41.3p per kilowatt hour feed-in tariff and 8-11% rate of return – it also outlines that the UK solar industry is already exposed to significant potential policy risks-more so than most other European markets – even though the FiT is only six months old.
The report defines six market segments which are emerging; five on-grid, and one off-grid. Solarbuzz claims that 2010 demand has already seen rapid growth in residential installations, with the South East and South West regions accounting for 45% of the English part of the market in MW terms (areas with the highest levels of irradiation). In addition, an emerging pipeline of large scale commercial, agricultural and industrial projects are currently going through the application and permitting processes, ready to impact 2011 demand, says the report.
Adding to the success of the government subsidies, the PV company network is also increasing steadily. Big name national utility and retail brands are beginning to enter the UK solar market (British Gas, Ofgem, M&S, Tesco), which join a fast growing downstream installer network that exceeds 500 companies. The leading wholesalers and installers, constituting a group of eighteen companies, are well-positioned to serve the burgeoning market. Back in 2009, the top three of these accounted for 60% of shipped wholesale volumes.
“The early entrance of big name brands are helping to lend public confidence to what is generally a poorly understood renewable energy source in the UK,” said Alan Turner, Vice President of Solarbuzz Europe. “These companies join a multitude of European and international companies scrambling to establish early positions in this fast-growing embryonic market.”
The wide range of end-market segments has led to four main downstream channels to market. These are not completely exclusive and examples of overlap can be found. In addition, novel business models are being advanced, still to be tested for practical viability, but with some gaining traction. The fragmented end-market, together with the diversity of the installers and wholesalers, is further complicated by the 60 module suppliers that have already gained the accreditation necessary to enter the market. This downstream picture sets extreme challenges for solar companies to operate profitably in the UK, outlines the report.
“Notwithstanding the potential uncertainty over government policy, no major company can afford to ignore this market opportunity,” concluded Turner. “The challenge for companies is to construct business models that can deliver profitable growth while volumes are still low, while at the same time phasing their level of downstream investment consistent with the policy risk.”
A full outline can be viewed by visiting Solarbuzz online, where the report is available for the hansome sum of $3,995.