The correlation between the introduction of the feed-in tariff and installations of solar PV in teh UK has been studied in Solarbuzz’s latest Solarbuzz UK PV Market 2010 report.
Amongst other factors, it looks at: government policy, market segmentation, market size, downstream companies and shipments, module mix, factory gate and installed solar PV systems pricing, and a five-year market forecast.
With solar PV feed-in tariffs as high as £0.413/kWh paid over 25 years and Government incentives set to yield immediate installed solar PV system Internal Rates of Return between 8% and 11% over the next 12 months, Solarbuzz forecasts that the foundations are in place for solar PV market growth in 2011.
Trends identified in Solarbuzz UK PV Market 2010:
- In regards to the locations of residential solar PV installations the South East and South West regions of England account for 45% of the market in MW terms;
- An emerging pipeline of large scale commercial, agricultural and industrial solar PV projects are currently going through the application and permitting processes, ready to impact 2011 demand; and
- With several big name national utility and retail brands entering the UK solar PV market, the leading wholesalers and installers, constituting a group of eighteen companies, are well-positioned to serve the burgeoning market.
“The early entrance of big name brands are helping to lend public confidence to what is generally a poorly understood renewable energy source in the UK,” says Alan Turner, Vice President of Solarbuzz Europe.
Furthermore, Solarbuzz has identified that the wide range of end-market segments has led to four main downstream channels to market. These are not completely exclusive and examples of overlap can be found.
In addition, novel business models are being advanced, still to be tested for practical viability, but with some gaining traction.
Fragmented market
The fragmented end-market, together with the diversity of the installers and wholesalers, is further complicated by the 60 solar PV module suppliers that have already gained the accreditation necessary to enter the market. This downstream picture sets extreme challenges for solar companies to operate profitably in the UK.
However as previously reported by Renewable Energy Focus, Solarbuzz has identified in the report that the UK is already exposed to significant potential policy risks.
“Notwithstanding the potential uncertainty over government policy, no major company can afford to ignore this market opportunity,” concludes Turner.
“The challenge for companies is to construct business models that can deliver profitable growth while volumes are still low, while at the same time phasing their level of downstream investment consistent with the policy risk.”