Still A Bright Future For The Solar PV Industry

On Monday 31st October, Greg Barker, Minister of State for Energy and Climate Changed released an official written statement confirming the changes to the feed-in-tariff for Solar PV. The changes mean over a 50% reduction in the generation tariff for Solar PV installations up to 50kWp, and since the announcement there has been a great deal of media speculation regarding the security of the Solar PV industry. Operating since 2006, Energi PLC have been part of a successful and growing industry long before the introduction of the feed-in-tariff, and with strong strategies and careful planning, there is still a prosperous future for the PV industry.
The feed-in-tariff was introduced by the UK government in April 2010 as a way of encouraging consumers and businesses to generate their own sources of renewable energy. The government estimated the initial tariff would generate a return of investment of around 5%, with the initial capital outlay being repaid after approximately 10 years and the remaining 15 years providing profit. In addition to the tariff, there were also savings to be made on electricity bills, which with rising electricity prices was a key selling point of its own.
As the Solar PV market became more competitive and buying power for solar panel installers such as Energi became stronger, the cost of installing solar panels has reduced dramatically. These savings were passed on to consumers, which in turn increased the return on investment. What it also meant, was that the initial capital outlay could be paid back in around 6 years. Whilst the introduction of the feed-in-tariff undoubtedly created a boom in the Solar PV industry, it also shifted much of the focus on to pure profit as opposed to the key benefits of installing photovoltaic systems and the positive effect of solar on the UK economy and environment.
Energi were launched in 2006 with a prime focus of encouraging small scale Solar PV installations, improving energy efficiency within businesses and homes and supporting on-site Solar PV generation. These factors are what make renewable energy generation such as Solar PV a key part of the UK’s energy mix and it is important this focus is not lost. Whilst the introduction of the feed-in-tariff was undeniably positive for the industry, it forced a large rush of smaller companies and one-man enterprises jumping on the back of the financial rewards and creating an industry based solely on high ROI.
The feed-in-tariff cuts were expected and companies such as Energi who have extensive knowledge and experience in the industry have always been prepared for feed-in-tariff reductions. The changes were initially expected from 1st April 2012; however Monday saw an unexpected review of this date, with the cut-off for installations being brought forward to 12th Dec 2011. Whilst this has caused disruption in the industry, for Energi it is simply a case of putting plans into place earlier and preparing for the long-term future of the industry, and not focusing solely on short-term gain.
One outcome of the feed-in-tariff cuts we will be likely to see is the fall of smaller Solar PV companies or those who perhaps only entered the industry on the back of the investment potential created by the feed-in-tariff. The struggle for organisations such as these is they may not have the strong business relationships, industry knowledge and buying power to combat such significant changes to the tariffs. What we will see, is the larger, more established companies thriving and maintaining the steady growth of Solar PV as was initially intended.
The new government tariff predicts an average return on investment of 5-6%, yet with careful planning and professional strategies in place, there is still scope for both commercial and domestic property owners to receive percentage return figures in double digits going forward. Above all, the long-term benefits for Solar PV are still an integral part of our future. With electricity prices continuing to rise and energy supplies at risk, Solar PV will continue to grow and prosper and we will see a more realistic emphasis on energy efficiency and renewable energy generation.
Overall the review of the feed-in-tariff creates clarity for both customers and businesses within the Solar PV industry. The position we are in now is no different to when the feed-in-tariffs were originally introduced, and with a more balanced and stable approach we can look forward to a bright future for Solar PV.
For further details on the future of Solar PV visit energiplc.com.