Everyone knows the United Kingdom gets a lot of rain – up to 285 days per year – but that hasn’t stopped solar panels from dotting up on rooftop after rooftop.
Indeed, despite having one of the wettest climates in all of Europe, the UK has stealthily become one of the continent’s largest solar markets. Since the Labour government announced a feed-in-tariff program in 2010, the amount of solar energy has increased 41 times to reach a milestone of 1,200 MW in February 2012. Suntech is well positioned to lead in the UK; currently it holds more than 16 percent of the market. Part of that is due to Suntech panels’ stellar weak-light performance, which refers to the ability of panels to generate electricity even during times of low solar irradiance.
Certainly the UK’s journey to harnessing the sun hasn’t been without hiccups. Recently the industry has witnessed a rollercoaster of policymaking that has sent mixed signals about renewables at a critical time for the industry.
In November 2011, the government gave just six weeks’ notice that FITs for domestic solar installations would be cut by half. A second wave of cuts in April 2012 took down the FITs again – to USD$0.34 per kWh. And then during the summer of 2012, the subsidies were cut once more to USD$ 0.26 per kWh, while the length of time for eligibility was cut to 20 years from 25 years. In justifying the cuts, the UK government has said they reflect current market conditions and the precipitously declining rate of solar energy prices. Indeed, in 2011, globally the price for wholesale solar declined by more than 50%.
Yet despite the recent ups and down in subsidies, solar still remains an attractive proposition – with an average of 9% financial returns for UK households. That’s better than what UK residents would receive from banks and most average investment opportunities. This is the story we’ll need to embed in the minds of solar customers. During the times of healthy FITs, solar’s selling proposition might have been “Install PV and earn money.” Now the tagline should be “Implement solar and save – it’s still cheaper than many energy forms.”
We’ll continue to watch how the UK government proceeds regarding renewable energy policy. We all know policies need to be flexible enough to adapt to changing times, but sudden and drastic cuts like UK’s most recent FIT decreases shake investor confidence. What’s on our side is that as solar prices continue to drop, we’ll soon reach the point that any homeowner planning to build a house will have the automatic reflex to plan for few solar panels on the roof.
That time is just around the corner – as solar prices continue their downward march to become cost-competitive with fossil fuels.