Hardware and labour costs increased, but we are now gradually returning to solar’s traditional cost curve as prices fall. Here’s why that’s to the advantage of consumers and installers alike.
Jina Kwon, UK and Ireland general manager of Otovo, highlights the trends shaping solar across Britain as costs of installations plummet.
UK installation costs recovering from recent shocks
2022 marked a change to the usual decline in solar pricing per watt. When energy prices shot up in the autumn of 2021, demand quickly outgrew supply as consumers flocked to future-proof their energy supplies and capitalise on the greater relative affordability solar was able to offer.
By January 2022, every single pair of hands in the solar installation business was booked for months in advance, so labour prices shot up. By April of the same year, pretty much every European warehouse was emptied of modules and inverters. Equipment prices quickly followed the installer labour’s upward trend.
But this past winter, the situation changed: we are now returning to a downward trend and have seen the cost of solar installations come down abruptly already in 2023.
It is no wonder that installations in the UK have reached a seven-year high in the first months of the year, according to figures from the standards organisation MCS (Otovo only works with MCS-certified installers). The boom in new rooftop solar units was also more than double the number of installations reported during the first quarter of 2019.
We now have the most affordable residential solar in two years, according to Otovo cloud data, as solar installation costs in the UK have fallen by 13% between September 2022 to March 2023.
This is great news for homeowners considering investing in solar and battery storage, and so too for solar installers who will benefit from the improved supply of hardware, reducing the administrative burden in securing and reorganising hardware as well as in managing customer expectations in installation times.
Solar price trends
The graphs above illustrate the solar cost curve using data from the Swedish market: a medium-sized representative market that illustrates a situation common for most of Europe.
Hardware costs are coming down once more because many new manufacturing capacities are coming online; the world can now produce 300 GW of solar, which is 50% more than what was installed last year. Consequently, solar equipment costs are expected to drop in the residential sector this spring and summer – a positive change for solar installers.
Labour costs are also showing signs of a decrease as the industry absorbs an influx of workers from neighbouring trades, such as roofers, carpenters and electricians, that are seizing the potential of solar across Europe.
Competitive installation pricing
Considering all the above, and with VAT on residential solar systems still set at 0% in Great Britain, the solar cost curve is massively weighed in favour of consumers and installers. Capitalising on this fertile ground is the final piece on the jigsaw.
Being part of a marketplace like Otovo offers the benefit of greater bulk buying power. This can help installers vastly reduce their hardware costs and increase profits.
It’s also important to make sure that you can set your own prices and decide which installation projects are worth your time. As an installer, you must take into account hardware, the distance you have to travel, and various installation steps.
All these factors affect the price and attractiveness of an installation, and you should be able to choose if these parameters fit your needs. With platforms such as Otovo, installers can dictate their preferred working regions and hardware partners and set prices.
Furthermore, as demand for solar ramps up and customers seek to capitalise on lower costs, installers can easily gauge the demand and pricing requirements in any given area across the UK, helping to ensure that they keep their prices competitive and remain profitable.
For example, as demand in an individual installer’s home area cools or they have more capacity to do jobs that are further away, installers can work with Otovo’s account managers to be competitive in another area, or gain pricing insights about a particular area in the UK as there are often regional price differences.
Ensuring your time isn’t wasted
Many installers in busy, high-demand times like these spend more time having preliminary discussions and visits with customers, making offers, and organising marketing and sales. All this can become a real-time thief, making it harder for installers to focus on the most important part of the job – installations!
This is especially the case if a project is not then subsequently undertaken, meaning time and resources have been expended without a pay-off. Customer support post-installation also requires a dedication of resources: the time you could be working on the next installation projects.
Project chasing and planning are major time drains for installers. Creating a reliable stream of projects that are low in acquisition effort is much more cost-effective. This can be easily achieved through a sub-contracting model with larger contractors or speciality providers, like Otovo. This provides installers with projects already sold, planned and passed on to you.
A profitable time for installers
Our technology seamlessly fills the order books of installers, delivering sold jobs for installers instead of leads, as well as working closely with local installers post-project, handling customer aftercare and responding to quality control concerns by lending expertise on hardware troubleshooting.
More and more people are beginning to realise how worthwhile it is to have solar panels installed, and as installers, demand for your services will continue to increase. So make sure you take advantage of the increased demand for domestic solar: this will be a very profitable time for solar installers by analysing prices in different regions, reducing hardware costs by bulk buying, and ensuring time-wasting projects are not taken on.
Otovo works with hundreds of installers to help provide this type of feedback and advice as part of the service. To learn more about Otovo and how it can work for your installation business, drop us your details on https://installer.otovo.com/signup/gb/