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Comment: Short-term gold rush despite UK feed-in tariff review?

Solarplaza, edited by Renewable Energy Focus

The Renewable Energy Association (REA) is optimistic about the UK solar photovoltaic (PV) market despite uncertainty over the future of feed-in tariffs.

Solarplaza’s Chief Executive, Edwin Koot, has spoken to Ray Noble, solar PV specialist at the Renewable Energy Association (REA), to get his view on the UK feed-in tariffs (FiTs), following the Government’s announcement about a fast-track review, and an unexpected tariff rise of 4.8%.

Despite uncertainty over the future of the feed-in tariffs, Noble is still optimistic about the UK solar PV opportunity. He is predicting 400-500 MWp will be installed in 2011/2012, and urging European organisations not to abandon their UK plans as he explains:

“The 4.8% increase to the FiTs has surprised many people as they didn’t expect the tariffs to be index-linked from day one. When the FiTs were introduced in April 2010 most people believed that the rates were fixed for the first two years and only index-linked once an installation was signed up to receive the tariffs.

"The 4.8% increase to the FiTs has surprised many people as they didn’t expect the tariffs to be index-linked from day one."
- Ray Noble, REA

“It’s a significant increase that’s made the UK PV market a more lucrative place to be at the moment. And for the next few months it will create a solar ‘gold rush’ across the country. The domestic market will continue to accelerate and take advantage of the increased tariffs. And I’d expect to see a surge of larger projects pushing to get arrays over 50 kW signed up before the 1 August, when any changes from the Government’s fast-track review come into effect.

“There’s been a lot of speculation about the fast-track review and most of it isn’t true. When the FiTs were first introduced, immediately there was huge interest for 5 MW solar farms and large roofs as well as complete social housing estates. This surprised the UK Government as they didn’t think solar PV was capable of being a big power generator like other renewable energy technologies such as wind and tidal.

“Unfortunately the Government did not compare the UK light levels with Germany, which are very similar. The result has been that the Government allowed for only 4 kWp projects in their budget for the first four years compared with industry wanting to install up to 5 MWp projects. This has caused the problem as although the present Coalition Government knew this was happening they submitted a domestic scale budget into the Comprehensive Spending Review. However, rather than admit their mistake the Minister has elected to trim the solar industry to match his budget. After waiting for over 10 years for a FiT, the industry, that is no longer a little cottage industry, is fighting back to make its case.

“However, the Government has now woken up to its potential and are seeing PV differently; believing it now has a more meaningful place in the power generation market. The fast-track review is specifically looking at ‘small generation’ – 50 kWp to 5 MWp – to evaluate solar PV in line with other technologies and decide how they can sustain the tariffs for the long-term and help address the energy gap.”

Cutting too much

“The tariffs that the Government has suggested in its consultation document are just a joke and do not reflect prices in the industry. Prices have fallen by over 30% in the last year, and tariffs could be and should be adjusted, but reducing tariffs by over 70% as the Government is proposing is just silly and shows the Government are not talking to the industry.

"...the Government has now woken up to its potential and are seeing PV differently; believing it now has a more meaningful place in the power generation market."
- Ray Noble, REA

“The announcement about the fast-track review has unsettled many organisations, especially those based in Europe who are looking at opening new UK offices to take advantage of the solar opportunity. My advice to them would be that if you can afford to operate in a market installing under 50 kWp, come over. It’s a great time to build your brand and get ready to take advantage of the wider market opportunity once there’s more certainty over small generation arrays.”

Still optimistic

“I don’t think the fast-track review has had a huge impact on the industry and I believe the market volume will remain balanced. There are still huge opportunities for public buildings, like schools, hospitals and social housing, and within retail. Each roof counts as a separate installation so instead of having one large array, it can be split up into several smaller ones to stick within the safe 50 kWp limit for micro generation.

“We’re still optimistic about the UK solar PV market, and believe that for the next FiT year (1 April 2011 to 31 March 2012) we will see 400-500 MWp installed. Of this, 300-400 MWp will be on public buildings, domestic houses and retail outlets with the remaining 100 MWp on a few large roofs or solar farms located on ex-industrial sites which the UK, with its heritage, has many suitable sites.

“We are finding that this Government, although fully committed to the FiTs prior to the election and in fact suggested raising the maximum size project to 10 MWp, are now trying to back track and suggesting it was always considered to be a domestic market. The industry is now stronger than the previous cottage industry and will fight the Government on this issue, as they are the one that made the mistake, the industry always knew the full potential solar can bring to the UK. Watch this space as we intend to raise the awareness of this Government error!”

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Photovoltaics (PV)  •  Policy, investment and markets