An article published in the Financial Times last week has vividly highlighted just what effect the recently introduced feed-in tariff has had on the UK solar industry. The news that record numbers of people have decided to install solar panels is largely due to the feed-in tariff legislation which offers installers a healthy return on investment, off-setting the costs of buying and fitting the kit.

The figures published in the FT last Tuesday taken from Ofgem state that this month alone, more than 2,200 homes have fitted solar panels compared to 1,700 last month and 1,400 in June. Indeed, with figures that more than 6,600 households have installed solar panels since the introduction of the tariff system it is good evidence that this incentive scheme could herald the beginning of a boom in the UK solar industry.

Unsurprisingly, The Financial Times paid particular emphasis to the obvious financial rewards associated with solar installation rather than environmental benefits. With the case example of John Keown, a company director who invested in solar through a scheme offered by British Gas, a good case was made for the long term viability of solar PV projects.

Keown will be set to reap the benefits of solar energy installation with expected returns of £1000 per year through savings on electricity bills and revenue from the tariff. Keown for example has estimated that since he installed his solar panels in April he has made £289 from the feed-in tariff. He stated,

“I haven’t gone into self-produced energy to be green. I’ve gone into it because I think it’s a good financial saving, perhaps even better than having an Isa account.”

Certainly, it seems to be growing in the public consciousness that the installation of solar panels to households is more than just a green fad or something which can bring about negligible carbon footprint reductions. The high rates of return which can be achieved through solar panels is likely to attract investors exponentially in the future as word catches on that sourcing and installing a solar system doesn’t have to be painful process.

Solar PV installation, Harpenden, Herts. 2.22kWp system

Having been interested in domestic energy generation for several years, we’ve been watching developments in the various technologies over this time. The wind technologies for the domestic market never lived up to expectations. Our hot water is obtained through a gas combi boiler so solar hot water wouldn’t be financially viable. As for PV, the recent government FiT scheme suddenly made it very attractive. So we started looking into it. We did our research on systems, manufacturers, technologies, searched websites for indicative prices and contacted several installation companies for a chat.

At this point I must warn prospective PV clients about the selling techniques some companies employ. As knowledge grows about domestic PV and the government’s incentives, companies are springing up at a very swift rate to jump on the band wagon. There’s companies sending out reps with little or no knowledge of the technicals, and operating the ‘double glazing’ sales/marketing techniques whereby the price drops 40% over the course of their visit! If you come across one of these techniques, DON’T sign up!! The reputable companies will provide an indicative quote by phone or email and if you’re interested in taking it further, they’ll send out a technical bod for a site visit. The site visit will confirm your property’s orientation, the roof construction, the cable routing, the siting of the electronic boxes, and confirm (or modify) the indicative figures of generation (units and cost benefits) that you’ll have received in your provisional quote. It’s worth bearing in mind that any indicative figures given to you should have been based on the government’s SAP figures, which are generally conservative.

The company we chose was Spirit Solar, based in Reading. They were professional, thorough, knowledgeable and above all fun to deal with. They shared the ‘buzz’ and excitement of ‘green’ energy, which made the whole experience even more pleasurable. The installation went without a hitch and we were generating juice by 4pm on the second day. We do, however, live in a bungalow which made the install relatively easy. There was no need for extra scaffolding and we had given thought ourselves to the cable routing to make things easier.

We’re now one week on from commissioning and all the facts and figures we worked out (and those we were quoted in quotes etc) appear to be on target as expected. And we can’t stop watching the Sunny Beam wireless generation meter!

We have 12 x 185kWp Yingli poly panels with a SMA Sunny Boy 2500 inverter, providing a 2.22kWp system. We face due south-west with no shading. The expected annual output is around 1,750kW – about half of our annual electricity usage. System cost was £10,500.

We anticipate an annual return of around £900 – a combination of Feed-in, export units and the saving on our electricity bill. Guaranteed for the next 25 years, and tax-free!

Steve Bryant. Aug 2010.

As usual, it seemed that the UK was falling behind competitors from abroad from a reluctance to look to the future and fully back green energy through strong legislation. Solar markets in Spain, Germany and Italy to name but a few in Europe, attracted investment through incentive schemes in the form of feed-in tariffs. With the UK government finally introducing the Clean Energy Cash Back scheme in April 2010, it now appears that the financial mechanism is in place to help UK solar investment catch up with more mature markets overseas.

According to many within the industry, the UK now has everything in place to become a player in the global solar market.

“The UK market for solar PV is growing explosively. This is because the FITs [feed-in tariffs] bring a huge new raft of players – the energy users – into the market; broadening it way beyond the traditional energy industry. All renewable power sources are benefitting, but solar is doing best because it is so easy to apply,”

Commented Philip Wolfe, Director of Ownenergy and leading exponent of feed-in tariffs.

With the tariffs working as a means of incentivisation for investors who were once reluctant to invest in what was once an extremely expensive field, the tariffs offset costs and greatly improve the attractiveness of green energy investments. In all countries where tariffs have been introduced there has been a massive uptake in investment with individuals keen to take advantage of legislation-protected investments with healthy ROIs.

With regards to potential for the solar PV industry, Edwin Koot CEO of Solarplaza stated that,

“Having experienced the benefits that FITs have to offer, European countries are now looking to capitalise on the emerging UK market. We can already see signs of this happening for our upcoming UK PV Conference: where 67% of delegate registrations are from international companies, compared to just 33% from the UK.”

However, warning that in the current climate the UK solar PV industry is unlikely to achieve overnight success, Clive Collison of South Facing said,

“It will take time to develop the UK market. Currently there is a lack of knowledge so education of potential customers and businesses is needed. Right now, very few people understand the feed-in tariff system and the opportunities to their full extent.

It took Germany, Spain and Italy three years after the start of their feed-in tariff to reach a substantial market scale. No doubt a similar market development will occur in the UK. That is why conferences like the UK PV Conference are important, to educate the business community and customers and build the business infrastructure. There will be plenty of business for everybody.”

With the Queen’s speech today outlining the coalition Government’s plans to revitalise the economy, those within renewable energy will be pondering the future of the UK low carbon economy.

Frost & Sullivan have conducted a study which indicates that the Clegg-Cameron alliance commitment to a low carbon economy could prove beneficial to other struggling industries and in particular, chemicals. The chemical industry plays an important part in the manufacture of new renewable technologies such as solar PV. Frost & Sullivan therefore predict that the growth of the UK solar industry, pushed by the feed-in tariff could help support the chemical industry.

Making comparisons to Germany who introduced their own feed-in tariff system in 2000 in order to incentivise solar investment, Frost & Sullivan believe that the UK feed-in tariff could prove to be a similarly successful catalyst for UK industry as a whole.

Frost & Sullivan Industry Analyst, Dr. Nicola Rudd stated that,

“Increased deployment of photovoltaics has a knock-on effect on the chemical industry as the raw materials, such as solar grade silicon and industrial gases, are supplied by chemical manufacturers. Several of these companies, such as PV Crystalox Solar and Linde, have facilities in the UK and could benefit from this increased local demand for photovoltaics.”

Rudd believes that other areas of UK manufacturing could also benefit from moves towards a low carbon economy. The manufacture of electric and hybrid vehicles in the UK is set to grow, creating jobs and supporting related industries. Rudd believes that,

“The UK is going to be a manufacturing hub for electric vehicles, as demonstrated by Nissan’s announcement that they are going to be manufacturing electric vehicles in Sunderland from 2013.”