Solar future 2012 the success of pv market development in the uk


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Colin McNaught, AEA Knowlege Leader and author of the AEA Microgeneration Index ( reviews the success of PV market development in the UK at The Solar Future UK Conference 2012.

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Solar future 2012 the success of pv market development in the uk

  1. 1. Solar FutureThe success of PV market development in the UKColin McNaught26th June 2012
  2. 2. AEA Advised DECC on Auditor for the RHI scheme Renewables roadmap, RHI, FIT, CHP Quality Assurance CRC UK emissions inventory BPVA MCS Installer survey Major provider of environment and energy consultancy WRAP PV Industry report and advice to the private sector
  3. 3. Agenda• Looking back – trends & patterns• Looking forward – who & where is the growth?
  4. 4. A brief history… Low Carbon Buildings LCBP Solar PV: • 11,490 kWp • 5,586 sites • Avg £5,924 per kWp • £45.5 million grant Clear Skies “The gap led to "a famine". "a lot of DTI Domestic Field Trial damage to a rapidly- 2002 installs: growing industry" • 262 kWp • 12 sites • Avg £7,200 per kWp Source: IEA & DECC
  5. 5. The Impact of the FIT Capacity 1,250 MW 282,000 Installations Registered schemes – Ofgem 22 June 2012
  6. 6. The Impact of the FIT on Solar PV• Domestic sector = 75% of capacity 97% of installs Registered schemes – Ofgem 22 June 2012
  7. 7. Surges in Solar PV Certain reduction 43p to 21p/kWh Possible reduction 43p to 21p/kWh Energy Efficiency requirements• Peak of 29 MW in one week, circa £75 million invested• 2010/11 around £640 million invested• Surge around 6 weeks before deadline DECC 22 June 2012 up to 50 kWp
  8. 8. Falling module prices Source IMS
  9. 9. The danger of deflation• Centre for Economics and Business Research: “The primary danger is that once deflationary expectations are entrenched, consumers will delay spending and businesses will delay investing as this can be done more cheaply in the future. As a result, deflation can contribute to downward economic spirals and turn a recession in to a deep and lasting depression.”• Tariff cuts may over-ride the impact of deflation• Difficult questions: Are tariff cuts needed to motivate buyers? What happens as the cuts become smaller?
  10. 10. Location, Location – Solar PV by Postcode Focus on Sheffield Focus on London Ofgem Jan 2012 Domestic only
  11. 11. Which districts have the best market?
  12. 12. Scale of Domestic Market 26 Million Homes 26 Million Homes 67% Owner occupied 96% are not flats 50% EPC D or better 50% Southwards facing Less: - Listed buildings Target Market - Shaded roofs 4.1 million homes - Unsuitable roof structures
  13. 13. Scale of Domestic Market• Around 300,000 installs• Around 2/3 on single properties (not rent a roof/social housing)• So 200,000 owner occupiers• Or 5% of estimated 4.1 million market• How do future buyers compare with past buyers?
  14. 14. Profiling the market4.1 millionhomes Early Innovators Adopters Early Majority Late Majority Laggards 0.10 million 0.55 million 1.40 million 1.40 million 0.66 million 0.3 GW 1.7 GW 4.2 GW 4.2 GW 2.0 GW
  15. 15. The next generation of customers • Innovators – venturesome, educated, multiple info sources; • Early adopters – social leaders, popular, educated; • Early majority – deliberate, many informal social contacts; — More risk averse = De-risk the process and the returns — Need confidence = They seek the market leader — Less affluent = Price Matters + Finance Matters • More Ford Focus than Morgan kit car? • Need to re-build awareness post the big cuts
  16. 16. Moving beyond the FIT• Increasing the value of export• Impact of energy price rises
  17. 17. A competitive investment• A £6,000 investment in Solar PV vs. Cash ISAs• 12 million Cash ISAs in 2010/11 = £38 billion
  18. 18. Allies and Partners• Needed to re-engage and update customers – On cost, on investment returns, on quality – Public Sector: EST, Green Deal, DECC… – Private Sector: Which?, money journalists, banks…• But need Clarity and Consistency of messagesEST: Main Solar PV web page EST: Home Energy Generation Selector Potential costs & savings for Solar ElectricityAn average system is 3 kWp and will cost Panelaround £10,000 (including VAT at 5%). Typical capital cost before grants,Most domestic PV systems cost around depending on size and type of system £8,000 - £16,000£3,000 to £3,500 per kWp installed, installed.though small systems cost Financial saving (£/year) £190proportionately more. Costs vary Estimated payback 14 yearsbetween installers, so it is important to Estimated CO2 saving 920kg CO2get several quotes. (kgCO2/year)
  19. 19. New Strategies• The FIT and the surge have opened the market• The Challenge is to sustain growth: – New market segments – The financial case is still excellent – Less reliance on FIT = less policy risk – But less push from the tariff cuts – Smarter installations to maximise the other income – Focus on cities
  20. 20. Solar FutureThe success of PV market development in the UKColin McNaught26th June 2012