Builders' Merchants News

Solar trade seeks to allay fears that solar PV is no longer viable

Published:  15 May, 2012

UK: All four major trade associations representing domestic solar PV – the British Photovoltaic Association BPVA, the Micropower Council (MPC), the Renewable Energy Association (REA) and the Solar Trade Association (STA) – 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.

The Feed-in Tariff was launched in spring 2010, designed to offer returns of up to 8% 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?

While 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% 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% of the cost in the case of low income households.