A Bright New Dawn for Solar PV

By Ross McGuinness.

The past year has been a traumatic one for the burgeoning UK Solar PV industry. The massive deployment of PV in the UK, where the vast majority of the 1GW+ now installed nationally was completed within the past 12 months, continued the dramatic growth of the industry not just across Europe, but globally.

However, the mistakes made by the powers that be in administering the sector have resulted in a dramatic drop in install rate in the past three months and has taken some of the gloss off what should be seen a triumphant success of a green, clean and sustainable industry. To trundle back over the past 8-9 months where the industry has reeled from cuts, uncertainty and negativity is not what we should be talking about, that whole saga should have a line drawn under it. The future is bright for PV and that message must be broadcast far and wide across the nation.

The latest announcement from the Department of Energy and Climate Change was largely well received by solar companies, in stark contrast with previous announcements which either attracted derision or legal challenges! It finally seems that the Government is actually listening to the industry.

What we have craved for the past 9 months is certainty, a path forward which could be foreseen in advance and be prepared for. It appears that we may have just got that. The next wave of cuts which had been pencilled in for the 1st of July has been pushed back by one month. On the 1st of August we will move onto the new rates and new timeframes. At the moment a well located PV system should attract an IRR of 10% or more. PV systems will continue to deliver this kind of a return for any system which is connected and registered by the 1st August, after this we move to the new rates which will deliver a smaller rate of return. At the moment we envisage systems delivering returns of between 7-8%, which is still a significant return when you consider the interest rates being offered by savings institutions and many other investments in these economically turbulent times. So from a pure investment perspective PV remains a very viable and attractive option.

What we also now see happening will be a greater emphasis on large scale funded projects which will not rely on the FiT as a revenue model. The Renewable Obligation Certificate scheme is now a very real alternative for large scale PV installs as a means of funding expenditure. The massive drop in module prices has meant that where previously this scheme did not stack up financially it now offers a better incentive than the FiT for systems of 500kWp or more.

This newly opened avenue offers customers a great means by which they can avail of large amounts of discounted electricity thereby insulating themselves from the increases we are going to see on the price of power from the grid. As a company Kingspan has the financial clout and expertise to offer this exciting and hugely beneficial facility to clients. Building owners who have an available roof space of 4500m² or more should now be seriously considering integrating PV on their roofs.

The PV market globally has seen dramatic change in the past 2-3 years, growth across Europe has been remarkable. Despite being in the midst of a financial and economic crisis, PV markets grew faster than most market analysts predicted. In its latest Global Report the European Photovoltaic Industry Association made several major findings:

  •  In 2011, 29.7GW of system were installed globally which made PV the third most important renewable power source after wind and hydro, of this installed capacity the vast majority was located in Europe with 21.9GW connected.
  • Germany and Italy lead the way with 16.8GW between them therefore accounting for 60% of the growth in the global market.
  • The report identifies several markets where it believes we will see growth over the next few years, Germany, Greece, Italy, Belgium and the UK will to varying degrees continue to attract investment.
  • The simple fact is that PV is now a significant part of Europe’s electricity mix, contributing roughly 4% of peak demand.

Verifying this statement we had the amazing news story two weeks ago in Germany where over the course of a weekend PV contributed 50% of the country’s electricity requirement! Through the midday hours on Friday and Saturday, 25th and 26th of May, German solar power plants produced a world record 22GW of electricity equal to 20 nuclear power plants. That is an astounding fact, and one which should be seen as hugely encouraging to the rest of the European PV market.

Back here in the UK for the first time in many months the biggest challenge facing businesses is no longer what the implications of Government policy will be but rather trying to rebuild public confidence in PV. Concerted efforts need to be made by the solar trade associations to remove the stigma of negativity which has dogged the industry. The new FiT rates provide a platform for sustainable growth where businesses with effective marketing and business strategies will succeed. The stage is set, the lines have been drawn, and it’s now up to us to make the play.

 

Ross McGuinness is an Area Sales Manager with Kingspan Powerpanel, you can follow him on twitter @rossmcguinness or email ross.mcguinness@kingspan.com  

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