Solar PV set to become Less Affordable?

Clouds are appearing on the horizon in the solar photo-voltaic marketplace. Just as the UK resident has become used to the sight of solar panels on roofs, and has even become aware that they provide a decent return on investment, things are set to get a lot harder.

For the last year or so people have been able to claim a decent generation fee for solar panels supplied by an accredited installer, and this has created demand that has raised supply and consequently contributed to significant drops in solar panel prices. The typical break-even point is now well below ten years, and can be as low as seven years on some of the cheaper panels. Ten-year warranties, 25-year performance guarantees and an index-linked government generation payment of 43.3p per unit, all add up to a low-ish risk investment that should see you comfortably ahead by the time the panels' efficiency begins to wane.

So, what is about to change?

Well, firstly there is talk that the FiT (the Government's generation payment) is set to be slashed in half or more. Note that this only affects new installations, as existing installations have a commitment to pay an index-linked amount for 25 years. The effect of this FiT reduction may make the return on investment too long, and would put significant pressure on suppliers and manufacturers to get prices right down.

Which leads us on to the second wave of (potential) problems in the solar market: a trade war between the US and China. There are allegations that the Chinese are 'dumping' solar panels on western markets, such that western manufacturers are unable to compete. The US government is being urged by European manufacturers to retaliate against imports of Chinese solar panels that are highly subsidised by the Chinese government, and with generous loans and credit guarantees. The German solar industry association BSW is leading the way; a BSW spokesman stated that recent solar panel price reductions were "not a result of innovation but of uneven political conditions". The fall-out from this would be an immediate rise in the price of far-east imports. Combine this with a large reduction in generation payments, and home-owners may find the whole idea is completely uneconomic.

The Energy Saving Trust (EST) made a technical blunder on Friday and published a date of December 18 for the switch-over of new FiT contracts to a 20p/kWh rate (a drop of around 50%). Following this, it issued a press statement: In response to speculation on our position on the governments review of Feed-in Tariffs. It called the document a "draft consumer guidance ... to pre-empt the Government consultation which is expected next week". This hasn't stopped an online petition declaring the cut-off as too soon: 'Save-Our-Solar' 48-hour campaign to support UK solar Feed-in Tariffs from clickgreen.org.uk.

Quite when anything will really happen is highly uncertain, but if you are thinking of sinking ten grand or so onto your roof so that you can generate 'free' renewable electricity for the next 25 years and get paid for it, then you should get your skates on and get some quotes from MCS-accredited solar pv installers. Delaying now could see you paying more for the panels or getting paid less for the electricity that you generate.

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Comments

by Peter on 31 October 2011 Reply
The date I've seen on a copy of the EST document was the 8th December. We have already installed what we wanted to on our home, but I was working on a community project, which can't be completed before the deadline (be it 8th or 18th). Will be interested to see how 'commercial' FITs are changed and whether there will be anything different for community projects. Today (Monday 31st) is the day in parliament I believe.

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