UK solar PV market set to boom

• Five-fold increase in solar photovoltaic (PV) installations expected in 2010;
  
• Britain currently lagging a decade behind other leading European countries on solar installation.

The UK's solar PV market could grow five fold in 2010 as a result of feed in tariffs according to new analysis by PricewaterhouseCoopers into the prospects for the UK solar PV market.

PV cells capture and convert sunlight, even on a cloudy day, into electricity, which can be used to run household appliances and lighting. By 2015, the report estimates that the country's solar PV energy capacity could have grown over 30 times to reach 1000mW. However, even with this growth, the UK's capacity in 2020 would only reach the levels already achieved by Germany today.

Times are changing, as are policies and plans

The analysis finds that the widespread rollout of solar PV has been slowed by a number of factors such as the lack of incentives for small scale domestic installations, complexity of funding, and planning restrictions. The majority of existing UK installations are small domestic panel, similar to France and Germany.

However, feed in tariffs in continental Europe have driven rapid increases in solar PV installations, with annual increases in excess of 300% in many countries during the first year of the tariffs availability. The coalition government recently announced plans to implement a full programme of feed-in tariff systems for electricity in the UK.

Daniel Guttmann, renewables director, PricewaterhouseCoopers LLP said: "The significant expansion that may be just around the corner will change today's 'cottage industry' into a much more professionally organised sector. The PV market will become more sophisticated with more complex products and a greater focus on accountability for system performance.

"The industry will need to adapt and develop quickly to ensure that as much of the opportunity in terms of job and value creation is captured within the UK. Companies that have been successful so far have benefited from investment in order to fund expansion. Further investment will be required in order to train for and fund the rapid expansion expected. New entrants are likely to expand into the UK in coming years. We believe that this will be true across much of the value chain, but particularly downstream around installations."

The PwC study, On the brink of a bright future? Insights on the UK solar photovoltaic market also found:

• Solar PV represents only 0.3% of renewable energy in the UK installed today;
  
• Current solar capacity in the UK is 32mW - this makes the UK 11th out of 27 European countries and means the UK is a decade behind the largest European countries;
  
• The majority of UK installations are small domestic panels - (no larger than 3kW);
  
• In France and Germany, like the UK, domestic installations dominate PV capacity, while in Spain and Italy, large-scale solar farms are more common;
  
• UK industry observers interviewed for the analysis anticipate a potential fivefold rise in solar PV installation in the UK in 2010 as a result of FiT;
  
• Respondents to the market survey expressed concern that there are too few certified installers to meet potential demand;
  
• The industry will professionalise, consolidate and new entrants (including overseas companies) will drive the sector forward.

In order for the UK to fully benefit from solar potential, investment in infrastructure, skills and training will be required

Gus Schellekens, sustainability & climate change director, PricewaterhouseCoopers LLP commented:

"The focus on PV is timely with recently published roadmap documents outlining the future global potential for PV technologies. While its use in the UK is small today, PV has a promising future if supported by strong government policy that sustains early deployments and supports the technology's transition to cost competitiveness."

The research

1. Over a period of three months, PwC interviewed 25 companies across the UK solar value chain, conducted research into the UK and European solar markets and formed a view on the future potential of the sector for the UK
2. DECC forecasts that by 2020 98% of total installations will be domestic.
3. The payback achievable on solar PV installation sin the UK compares favourably with levels know to have stimulated markets in other countries. In the UK:
a. A typical homeowner can expect to achieve an average IRR of 7-9%. Higher levels are achievable when combined with grants or for particularly efficient systems or locations
b. Commercial building owners or investors in small installations will achieve lower rates of return in the region of 5-7% with correspondingly longer payback periods.