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As the party season ends, more sober thoughts turn back to the great issues that dominated towards the end of 2009. With the Copenhagen conference highlighting massive short-comings in international efforts to fight climate change, it will be hoped that 2010 will see the UK move ahead in the use of renewable energy and herald greater cooperation between the powers in agreeing .

2009 was a year which saw the announcement of the introduction of the Clean Energy Cash Back system, essentially a feed-in tariff designed to attract investment in the UK solar industry. The announcement by the Department of Energy and Climate Change (DECC) was welcomed by those who have seen how successful similar tariff regimes have proved in other countries where they have been introduced.

However, following the consultancy process which followed the announcement, there have been a number of observers who have noted that the tariff rate will need to be sufficient in order the UK to compete with more mature markets in Germany, Spain, China and the US. While this month will see some clarification of the specific rates to be set for the UK tariff, it will be absolutely essential that the numbers are sufficient to boost investment in the new industry.

Critics of government policy have been headed by the flagship group ‘We Support Solar’ claiming that many within the government are acting against the general interests of solar energy, something which they believe will be reflected in a watery feed-in tariff.

However, not all predictions for the UK solar industry in 2010 are so pessimistic. David Kidney, Under Secretary of the DECC stated that any criticism of UK solar policy is nonsense and that the UK are set fair to strive to compete with the big international players this year. Speaking at a low carbon conference last month, Kidney fielded questions from an audience which pulled no punches, claiming that the UK was a leading light in the use and development of renewable energy.

Speaking mostly of the UK’s big offshore wind projects, matters also turned to solar where Kidney was adamant that the UK solar energy is looking healthy. Talking with regards to the introduction of the feed-in tariff system in April, he claimed that,

“April FiTs [feed-in tariffs] arrive in the UK and the solar industry is gearing itself up for what it thinks will be a major increase in demand for its products.”

Everybody within the industry will be hoping that the government under secretary’s optimism is well founded. As we approach the tariff date we will be able to greater gauge the level of investor interest in solar PV products. Certainly, with solar markets still going strong in Germany with investors looking to diversify portfolios with green stocks, the UK industry will be hoping to attract similar capital.

With Ernst & Young offering their annual solar attractiveness indices at the end of 2009, it again highlighted the clear correlation between strong feed-in tariffs and attractive markets for investors. Until the UK can produce a robust tariff (hopefully this will happen in the first quarter of this year), investors will be put off solar investment by the traditional worries that returns to not justify investment.

However, with the government under massive media pressure to fight climate change, 2010 may just be the year which is looked back on as the watershed in solar installation. With growing public awareness of solar combined with viable solar investment products, the UK could be set to become a world player…we hope.

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