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Fears that solar PV is no longer viable are wholly misplaced

All four industry associations representing UK solar power join together to clarify good returns for householders

All four major trade associations representing domestic solar PV – the British Photovoltaic Association (BPVA) [1], the Micropower Council (MPC) [2], the Renewable Energy Association (REA) [3] and the Solar Trade Association (STA) [4] – have joined together to set the record straight about the current status of solar power and the Feed-in Tariff. The industry is concerned that the public may be confused about solar power and the Feed-in Tariff and would like to take this opportunity to clarify the situation.

3 min read

The Feed-in Tariff was launched in spring 2010, designed to offer returns of up to 8 per cent to homeowners looking to generate their own renewable electricity – tax free, index linked, and guaranteed for 25 years. No surprise then that we’ve seen over a quarter of a million domestic solar installations go in under the scheme, totalling over 1.3GW installed capacity. Two years later, the tariff is offering the same return as it did when it was first launched – yet the market is stagnant. Why?

Whilst actual rates of return are no longer exceeding government’s target range to the same extent as last year, a high level of consumer confusion around solar PV and the Feed-in Tariff may be playing a significant role in the drop off in the number of installations.  The last six months have seen a stream of headlines about “drastic cuts,” an “illegal consultation,” “legal wrangling,” “huge job losses” and “strict energy efficiency requirements”. However, while the industry undoubtedly went through a difficult time, these headlines obscure a more important truth.

Thanks to drastically falling costs, solar PV remains one of the best investments around, which shields customers from rising energy bills and generates an income to boot, while helping fight climate change and strengthen energy security.

There is also concern that the slip back into ‘double-dip’ recession is suppressing demand from worried consumers.

The facts about solar power and the Feed-in Tariff

  • Costs have fallen more rapidly in solar over the past 12 months than any other energy technology.
  • With investment today mainstream analysts expect solar power to be cheaper than buying electricity off the grid before the end of the decade, saving all consumers money in future.
  • A 4kWp system, the largest size for which the highest tariff is available, can be purchased today for under £9,000, whereas only one year ago it would have cost upwards of £15,000.  An average domestic system is around 2.5kWp.
  • Solar does have a bright future in the UK. It is an exciting and popular technology. Tariffs will reduce over time in line with these significant cost reductions, with the industry keen to keep rates of return roughly within the same target range.
  • Solar PV continues to offer very attractive returns in comparison to other investment options available to consumers.
  • 50 per cent of UK housing stock already meets the energy efficiency requirement for the higher tariff, so if your home has decent insulation, it’s highly likely to be eligible today.
  • For those homes that don’t yet meet the EPC-D, the Government’s Carbon Emissions Reduction Target scheme places an obligation on energy providers to subsidise domestic energy efficiency measures, up to 100 per cent of the cost in the case of low income households.

Reza Shaybani, Chairman of the British Photovoltaic Association, commented: “Around a quarter of the UK’s aging power generation capacity is due to close over the coming decade. We must cut our dependency to fossil fuel which we have no control over its security of supply or price. Solar PV can offer the clean, affordable and secure energy that we need for the future of the United Kingdom. We see investing in clean and green energy as a national duty.”

Dave Sowden, Chief Executive of the Micropower Council, comments: “Solar PV still offers attractive returns for consumers, in excess of many alternative investment products. Improving consumer understanding of solar PV and the Feed-in Tariff scheme is likely to be key to restoring healthy uptake levels. We are pleased that the policy framework is now on a more stable footing and are optimistic that this will signal a new dawn of consumer confidence in the microgeneration sector.”

Gaynor Hartnell, Chief Executive of the Renewable Energy Association, commented: “With gas and electricity prices on the rise yet again, returns for today’s investors in solar power are likely to be better than expected.  By the end of this decade, solar energy costs are expected to fall to the point where it costs the same to generate your own power as it does to buy it from the grid. A technology with this potential is bound to transform our energy future.”

Paul Barwell, Chief Executive of the Solar Trade Association, commented: “There is no financial explanation for the low installation levels we’re currently seeing. The main reason seems to be a lack of clear information for the public – an informational deficit which industry is today seeking to redress.”