A report released last week announced that the solar industry has grown worldwide despite the recession which has gripped economies. The report stated that the photovoltaic industry saw a 89 per cent increase through 2008, something which has been reflected through the first quarter of this year with the rise of investment in green technologies.

2008 marked an important watershed for the solar industry and photovoltaic technology in general, particularly in the UK as the British government passed legislation designed to promote green energy. The Energy Act of November and the establishment of the Department of Energy and Climate Change was seen to mark a shifting of gear in British political circles as the UK government sought to establish environmental legislation, emulating the success stories of California, Spain and Germany. The solar successes, particularly in Western Europe have been based largely on the establishment of coherent feed-in tariffs which have proved to be effective mechanisms at incentivising investment in the green sector.

In spite of the global photovoltaic revolution breaking out, the UK government has been slow to get behind the solar industry with enough weight to encourage green investment en masse. The recent political rhetoric of the prime minister Gordon Brown in which he espoused the need for a ‘Green New Deal’ in order to revitalise the economy through ‘greentech’ investment has not been immediately followed up by action. The feed-in tariffs which were established in principle at the end of last year will not come into effect until 2010 and until then, there are no other government schemes in place to make solar investment viable since the government terminated its grant program without warning at the beginning of the year.

Leading members of the solar industry, along with representatives from the construction industry have lobbied the government in order to ensure that the government’s rhetoric on solar and climate change is matched by action which will allow the solar industry to reach its potential in the UK, just as it is doing in Germany with outstanding commercial results.

Spain outstripped Germany to become the leading installer of new solar photovoltaic (PV) capacity in 2009, the European Photovoltaic Industry Association (EPIA) says.

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According to a Solarbuzz market report, solar investment in the Czech Republic increased 17 fold since 2007 due to the strong feed-in tariff there. Last year 50.8 megawatts of solar plant were installed in the Czech Republic compared to just 3 megawatts in 2007 representing a huge increase in solar investment. The Czech solar market, although still small compared to the European renewable giants Germany and Spain, has grown exponentially since the introduction of a feed-in tariff in 2005.

The Czech feed-in tariff has been extremely successful at attracting investment as it pays the highest rate for renewable electricity of any other European tariff. Currently set at 12.79Koruny per unit of energy fed-in to the grid (44p), the rate makes solar investment a very viable option for investors looking to diversify their portfolios by moving towards green shares. In the light of the recent economic downturn and the drawing in of purse strings in most sectors, solar offers investors a yield on their investment protected by government legislation. The Prague government has set itself the target of reducing its carbon emissions by producing 8 per cent of its energy by renewable means by 2010 and will therefore look to protect the solar industry within its borders.

While the Spanish solar market is still 48 times bigger than that of the Czech Republic, the Spanish sector has experienced a slowing due to the reduction of the rate of its feed-in tariff when the 500 megawatt cap was reached bring the rate paid down from 0.42 euros to 0.32 euros. This fall in the feed-in tariff rate was reflected by a marked reduction in Spanish solar plant and provides a warning to governments looking to sustain a boom over a long period. Jenny Chase of New Energy Finance commented that,

“I know some developers that were in Spain are now in business school because the market’s over, and some have moved to the Czech Republic”.

The Spanish example of the shrinkage after the initial 2007 boom will provide a warning to governments looking to implement their own feed-in tariffs in the near future. Certainly, the Department of Energy and Climate Change (DECC) will implement the feed-in tariff in the UK by the end of 2010 and are currently undergoing consultancy as to how to finance the tariff. Industry insiders have petitioned the government demanding at least a 40p/unit rate for electricity fed-in to the grid over a long term period of around 20 years. The Czech government have been extremely successful thus far and will continue to use their tariff system to attract investment in solar.

Although slowing somewhat in the past year, the renewable energy expanded despite the global credit crunch especially in the sector of solar, wind and geothermal investment. According to the World Wind Energy Association around 12,000 megawatts of wind power generation capacity were installed in 2008 along with 9,740 megawatts of Photovoltaic (PV) solar energy power generation potential. The geothermal sector saw a further 6,000 megawatts of capacity installed and it is believed that 2009 will see added expansion.

To oversee this expansion, The Renewable Energy Industry Agency (IRENA) has been established as a multi-national agency dedicated to the growth the renewable sector. It is hoped that the agency will help energy companies invest in renewable plant and increase investment in green technology. Similarly, they will be hoping to develop an awareness of renewable energy solutions in developing nations. Sigmar Gabriel, the German Environment Minister stated that,

“IRENA will help to remove the many obstacles which up to now have delayed the rapid expansion of renewables. The market is still distorted by subsidies for conventional energies, technological know-how is inadequate, information is not always correct.”

Last Monday in Bonn saw the inaugural IRENA conference, attended by over 120 delegates of a number of nations, such as Germany, Spain, Denmark, India, the United Arab Emirates (UAE), and Kenya (all the founder members).

Although the agency is conspicuously missing the membership of such countries as Australia, China, the United States, Japan and the United Kingdom, its original founder members are more than happy with the uptake in participation thus far and are confident that the other major industrial nations will be brought on board eventually. Indeed, a British representative of the Department for Energy and Climate change who was present at the conference was quoted in the Guardian as saying,

“We are certainly supportive and are interested in joining, but we need to make sure that what we’re joining has the right focus. There needs to be more focus on the deployment of renewables rather than just talking policy and issuing papers. And there needs to be a wider membership.”