Unfortunately the solar industry is not a level playing field at present.  The Chinese government has provided some enormous loans to their top PV manufacturers (e.g. http://uk.reuters.com/article/idUKHKH00202420100414).  These manufacturers are using the money for incredibly rapid expansion so that they are fast outgrowing all of their European competitors.  Being bigger means they have greater efficiency, which means the large Chinese players now have even lower costs than their foreign competitors.  There are obviously cries from US and German manufacturers about violations of international trade laws etc and indeed the situation is particularly unfair seeing as it was the German FiT that created the Chinese manufacturers in the first place, but there is little chance of any legal recourse in the near term.  The situation has led German policy makers to think about protectionist policies for solar though (‘buy German’) and provided fuel for the anti-solar lobby.

All that aside, the top-tier Chinese solar manufacturers are now producing high quality modules with lower costs than anyone else.  They have had a lot of experience with due diligence from European banks and are now pro-active in respect to quality control and bankability.  They are also beginning to invest heavily in R&D which will close the already small technology gap with Japanese and European competition.  Chinese solar manufacturers are integrating vertically in the value chain in a big way.  This means that for example cell manufacturers are starting to make wafers, silicon and modules etc. This gives them greater ability to control quality and improves margin retention.  They are also expanding downstream and bulking up sales teams in Europe with Europeans. This reduces the ‘fear factor’ of working with Chinese companies and taking revenue away from European wholesalers.  The strength of the big Chinese players is evidently putting a strain on its competition. If one had to choose between German or Chinese manufacturers as the most likely to be around in 25 years it would almost certainly be the Chinese.

It should be noted that there a number of Chinese manufacturers that do not have such high standards and should be avoided.  Many people in the solar industry are not convinced that the UK’s Microgeneration Certification Scheme is effective at weeding out these poor manufactures judging from the companies which have gotten through.  There are also lots of counterfeit modules  on the market now (for example fake Trina Solar and ET Solar modules are widespread) so its important to find installers with good checking procedures.

So does the rise of the big Chinese solar manufacturers damage the UK and make the Feed-in tariffs pointless, seeing as it will support the continued growth of unbeatable foreign competition?  I would argue that the only way to create growth in our manufacturing industry is to develop a domestic end-user market.  For a long time the UK has precious little in terms of PV manufacturing capability, which means that the strength of Chinese companies has little impact on us.  If we were not buying from China, we would be buying from elsewhere.   As the UK market grows, more people become engaged in the industry and start to look at product innovation.  Already there are a number of UK companies developing solar products specific to the UK market as a direct result of the introduction of the Feed-in tariff.

Furthermore, module manufacturing makes up only a small portion of the solar value chain.  Installing roof-top PV is highly labour intensive, and the feed-in tariffs will create a huge number of jobs in the badly suffering building services industry.  The fact that there are good quality, cheap Chinese panels available allows solar PV to be more competitive as a renewable energy source.  Costs are expected to fall rapidly over the coming years (as they have already) meaning that in around 5-6 years time the cost of solar electricity will be at par with retail electricity prices, which means the FiTs won’t be needed anymore.

Another point is that the big Chinese PV manufacturers will start doing the last manufacturing step, module integration, close to their markets.  This is because you can air freight solar cells, but you have to ship finished solar panels because of the glass (regular glass factories normally only serve a radius of 100km).  By doing module integration close to their key markets, manufacturers won’t have working capital tied up for 4 weeks and will reduce the risk of damage in transport.  Sharp already do this with a module integration plant in Wrexham, and we may well start seeing the Chinese companies open manufacturing plants in Europe, even in the UK, over the next couple of years which would provide an interesting boost to UK industry.

Eventually the playing field will level out again – China will get more expensive and there will be space for newcomers with new technologies, but for now the Chinese players clearly have the upper hand.

The sun hasn’t shone much over the Christmas period however, the lead up to the Christmas period saw a refocus by the UK government on solar photovoltaic energy. Announced on the 22nd of December, the Department of Energy and Climate Change (DECC) consultancy will look at microgeneration and the way the UK government can help small scale renewable energy through mechanisms such as the feed-in tariff which has already proved successful.

The feed-in tariff, introduced back in April incentivises investment in renewable microgeneration by offering fixed, premium rates for units of energy both used and fed back into the grid. Already, this mechanism has seen a huge growth in solar pv investment with traditional industries such as farming taking advantage of the profits to be made out of solar panels. Despite this government support for renewable energy, there are some fears that if the plug is pulled on the tariff too soon,

future projects and of course the future of UK renewable energy will be jeopardised indefinitely.

The consultancy which will last until March 2011 will endeavour to ensure that the longevity of UK renewable energy is secured through foresight and careful legislation. The Department of Energy and Climate Change has stated that the consultancy will focus on ‘quality, technology, skills and information’ and that ‘consumers need confidence that microgeneration kit will be of good quality. The industry needs to develop the technologies, the supply chain needs skilled workers to install kit and consumers need good information on microgeneration’.

Announcing the consultancy, Energy Minister Greg Barker said,

“We’ve already pledged financial support to encourage people to install kit like solar panels and heat pumps, today’s consultation will ensure that the industry and consumers have the confidence to invest.”

Certainly, while the financial mechanisms are in place for the time being, consumer confidence is still lacking in what is a fledgling industry not always attracting responsible business operations. Speaking on behalf of the more responsible side of solar energy operations, Dave Snowden head of the Micropower Council said,

“We have already seen extraordinary growth in microgeneration power generation solutions thanks to the introduction of the feed in tariff earlier this year, and look forward to similar incentives being extended to renewable heating and hot water systems next June. Today’s welcome proposals will help the industry grow with proper attention to quality, technology and skills development, whilst making it all much easier for consumers.”

Firm focuses on renewable energy sector with new team

A Westcountry law firm has created a new dedicated team to provide specialist advice on the renewable energy sector for the region’s farmers, land and property owners.

With the rapid growth in this market and the South West designated the UK’s first Low Carbon Economic Area, Stephens Scown has taken the step of appointing Sonya Bedford (pictured) as its new Head of Renewable Energy.

The specialist group, made up of experienced property, corporate and planning lawyers, are able to give legal advice on a range of matters including agricultural tenancies and compensation for loss of farming activities, options, leases and contractual issues.

The announcement comes as the firm, which has offices in Exeter, Truro and St Austell, launches a new specialist guide on solar energy, aimed at farmers and landowners, available on its website.

The sector is estimated to contribute around £215 million to the economy every year – many farmers and landowners are being approached by renewable energy providers and might be considering diversifying or supplementing their income, following the introduction of feed-in tariffs earlier this year.

Commenting on the new team, Sonya Bedford said, “Increasingly we’re acting for clients with a really diverse range of needs in the renewable energy sector – this includes local farmers and landowners, domestic property owners, major wind farm developers and operators, as well assisting villages or communities across the region to install wind turbines or solar panels. We are also involved in advising on property issues surrounding the Wave Hub site in Hayle.”

She added, “Working with local planning experts, accountants and other financial advisers, it makes sense to bring together all our expertise in one place to provide a more rounded service for clients. Here in the South West, because of our geographic position we’re really lucky to be able to harness the natural energy that surrounds us and renewable energy is ideally suited to rural areas.”

Sonya is an experienced senior agricultural and commercial property lawyer and is a member of Stephens Scown’s rural team. She is a Member of the Agricultural Law Association, a member of Regen SW and a Professional Member of the CLA and Member of Women in Property.

She added, “Landowners can reap the financial rewards that renewable energy brings but it’s equally important that people get the right advice to protect their assets. It’s a development area that many people are starting to explore, but can be easily caught out by the small print or enter into agreements without seeking proper professional advice.”

For more help or advice on renewable energy, contact Sonya Bedford on 01392 210700 or email s.bedford@stephens-scown.co.uk or visit www.stephens-scown.co.uk

Copy ends

September 28 2010

For more information contact:

Ryan Martinez
Deborah Clark Associates
Tel: 01208 77900
ryan.martinez@dca-pr.co.uk

UK farmers have been able to benefit from feed-in tariffs but as the government plans to review the sum paid for solar energy in 2012, now is the time to invest. The British government introduced feed-in tariffs under the guise of the Clean Energy Cash back scheme back in April and was designed as a way of boosting investment in solar photovoltaic (pv) energy which would help the UK meet climate change targets through the reduction of carbon emissions.

The feed-in tariff works by offering guaranteed, premium rates for units of energy both used and fed back into the grid from small scale solar pv generators. Where they have been implemented elsewhere, they have proved to be very effective mechanisms at incentivising investment in what were once expensive projects. However, government plans to reduce the rate of energy paid to solar pv generators after 2012 means that now is the time for UK farmers to take full advantage of the profits from solar panels.

Many landowners are already taking advantage of the tariff rate which guarantees a rate of 29.3p/kWh for units of energy generated from their solar panels. Certainly, with projects lasting for 25 years, there will be some very healthy profits to be made, something which has not gone unnoticed within the industry. Regen South West are just one example of solar energy specialists involved in rural solar projects. Chief Executive Merlin Hyman has described such projects as an ‘exciting opportunity’ and that they can offer,

“Essentially it is a guaranteed income for 25 years with a better return than if you were to put money in the bank at the moment. But it needs to be in the right place and on the right sites.”

The emphasis of finding the right sites has been echoed throughout the industry. Also, there has been a focus on the need to avoid fly by night installers keen to make a quick Buck and run in the great UK solar Klondike.

This is a view supported by solar pv exponents, Mole Valley Farmers who have their own demonstration solar site set up on their director’s land and are offering open day invites. Business Development Manager at Mole Valley, Andy Taplin has warned that,

“We are aware of lots of businesses popping up and calling themselves solar energy experts, what we’re trying to do is prevent businesses profiteering from our members.

Going on to add, “our main concern is that for these investments to work the solar panels need to last for 25 years to profit from the feed-in tariff — Mole Valley Farmers will be here in 25 years’ time, but I’m not sure some of these solar panel companies will be around once the gold rush is over.”