A presentation by Joju Solar's technical director Dr Chris Jardine at Solar Energy UK 2015 in Birmingham (15/10/13).

1. @jojusolar
An installer’s perspective
Dr Christian N Jardine
Technical Director, Joju Solar and Senior Researcher, Environmental Change Institute, University of Oxford
The Future of UK Solar

2. Future of UK Solar, Dr Christian Jardine
@jojusolarWhat will happen to the market?
10/13/2015
• Two critical things to consider
• What is the return on investment?
• Is this considered investable?
• Who is buying?
• What is the market confidence?
• What have they heard in the press?
• Will people be enquiring about solar?

3. Future of UK Solar, Dr Christian Jardine
@jojusolarInnovation Theory
23/09/2015
Uptake
Time
Innovators Early Adopters Early Mass Late Mass Laggards
Support for
innovation
Information and
incentives
Regulation

4. Future of UK Solar, Dr Christian Jardine
@jojusolarMarket segmentation
23/09/2015

5. Future of UK Solar, Dr Christian Jardine
@jojusolarCrossing the chasm
23/09/2015
Uptake
Time
Innovators Early Adopters Early Mass Late Mass Laggards
Support for
innovation
Information and
incentives
Regulation
Thechasm

6. Future of UK Solar, Dr Christian Jardine
@jojusolarInnovation Theory (new markets)
23/09/2015
Uptake
Rate of return on investment
Innovators Early Adopters Mass Laggards
5% 10% 20%15%

7. Future of UK Solar, Dr Christian Jardine
@jojusolarInnovation Theory (now)
23/09/2015
Uptake
Rate of return on investment
Innovators Early Adopters Mass Laggards
5% 10% 20%15%

8. Future of UK Solar, Dr Christian Jardine
@jojusolarWhat innovation theory says
23/09/2015
• Real danger that we have fallen off the bottom of the s-curve
• Prospects for domestic PV look very poor indeed
• Knock on effects for rent-a-roof model
• Knock on effects on the social housing market
• Government has no real idea of relationship between uptake and
rate of returns required
• Believe 4-8% is sufficient
• Modelled on southerly UK radiation.
• Policy withdrawn too soon to access the mass market

9. Future of UK Solar, Dr Christian Jardine
@jojusolar
13/10/
Commercial Market
Domestic Small Commercial Large Commercial
2kW 50kW 150kW
£5000 £65000 £150000
9-12% 15-18% 16-20%
10yr 7yr 5-6yr
10000/month 200/month Just a handful

10. Future of UK Solar, Dr Christian Jardine
@jojusolarReturns on investment
10/13/2015
Uptake
Return on investment
5% 10% 20%15%
Compared to residential
• We know even less about this market
• Uptake is much lower
• Higher initial hurdle rate
• Impacts likely to be more proportional

11. Future of UK Solar, Dr Christian Jardine
@jojusolar
13/10/
Simple levelised Cost Calculation
50kW
Price 55k
Generation (kWh) 42500
Used on site (kWh) 42500
Price/kWh supplied 5p
Retail electricity 10p
Cost parity Yes
• Proportion used on site is critical
• Suggests PV cheapest way of supplying electricity to a
commercial building
• Unfortunately, this is a deeply flawed calculation

12. Future of UK Solar, Dr Christian Jardine
@jojusolar
13/10/
Discounted cash flow - 50kW
-£100,000
-£50,000
£0
£50,000
£100,000
£150,000
£200,000
£250,000
£300,000
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
NPV
Discount Rate Applied
NPV of 50kW System
Without FiTs
With FiTs
Levelised Cost of Energy
Policy Makers
Academics
Businesses

13. Future of UK Solar, Dr Christian Jardine
@jojusolar
13/10/
Market niches
• Can you find people willing to install at low discount rates (low
IRRs)
• Councils?
• Corporates with cash reserves and CSR concerns
• Those wanting to go ‘green’ for brand differentiation

14. Future of UK Solar, Dr Christian Jardine
@jojusolar
13/10/
The importance of self-consumption
4.7% 60000 57500 55000 52500 50000 47500 45000 42500
100% 11.0% 11.4% 11.9% 12.4% 12.9% 13.5% 14.2% 14.9%
90% 10.3% 10.7% 11.2% 11.7% 12.2% 12.8% 13.4% 14.1%
80% 9.6% 10.0% 10.4% 10.9% 11.4% 12.0% 12.6% 13.2%
70% 8.8% 9.2% 9.7% 10.1% 10.6% 11.2% 11.7% 12.4%
60% 8.0% 8.4% 8.8% 9.3% 9.8% 10.3% 10.9% 11.5%
50% 7.2% 7.6% 8.0% 8.4% 8.9% 9.4% 9.9% 10.5%
40% 6.3% 6.6% 7.0% 7.4% 7.9% 8.4% 8.9% 9.5%
30% 5.3% 5.6% 6.0% 6.4% 6.8% 7.3% 7.8% 8.3%
20% 4.1% 4.5% 4.9% 5.2% 5.7% 6.1% 6.6% 7.1%
10% 2.9% 3.2% 3.5% 3.9% 4.3% 4.7% 5.2% 5.7%
0% 1.3% 1.7% 2.0% 2.3% 2.7% 3.1% 3.6% 4.1%
Price 50kW (£)
%selfconsumption
• Design systems to fit within load
• Assist in moving load to fit with solar

15. Future of UK Solar, Dr Christian Jardine
@jojusolarThe shape of the solar market
10/13/2015
Installations
Installer
Tradesmen
SMEs, PV Companies,
renewable companies
The big boys
15001

16. Future of UK Solar, Dr Christian Jardine
@jojusolarTradesmen
10/13/2015
• 1-3 man bands
• Roofers and/or electricians diversifying their core offering
• Small no of installations, but lots of them
• Residential
• Can slip back into core professions
• Can sell PV systems for a days labour
• Leads to very commoditised PV market
• Is it worth them retaining MCS accreditation?
• Suggestion: Return to core business, pick up jobs when they arrive

17. Future of UK Solar, Dr Christian Jardine
@jojusolarSMEs
10/13/2015
• 3-20 staff
• Offices and overheads
• PV/renewable specialists
• Residential/commercial
• Strong skills in house, technical expertise, marketing(?)
• Can they sell enough to support staff levels?
• Can they diversify offerings?
• Can they sell at high enough margin?
• Suggestion: Diversify or quit

18. Future of UK Solar, Dr Christian Jardine
@jojusolarThe big boys
10/13/2015
• Many staff
• Financial backing
• May own assets (=revenue)
• Foreign markets?
• Ground mount/commercial/residential at scale
• Strong financial position
• May be able to ride through (if they choose to)
• Large overheads, so high risk if market not there
• Suggestion: Use financial position to develop new products and
offerings

19. Future of UK Solar, Dr Christian Jardine
@jojusolarPlay or fold?
23/09/2015
Do you have any installation work next year?
Doyouhaveabrilliantidea
fordiversification?

20. Future of UK Solar, Dr Christian Jardine
@jojusolarDiversification
10/13/2015
• Obvious candidates: other heating, energy efficiency and green
products, EVs etc.
– New markets
– Up-sell to existing customers
• Thermal storage: Up-sell or use to boost rate of return
• Batteries: Broadly helpful for return, not a panacea, market not
proven yet. Expect mis-selling
• Commercial rooftops – returns look better, but historically a very
tough market to crack
• Look at all your skills – might be something surprising. Don’t rule
anything out

21. Future of UK Solar, Dr Christian Jardine
@jojusolarOn to the next s-curve
23/09/2015

22. Future of UK Solar, Dr Christian Jardine
@jojusolarSome lessons from last time
10/13/2015
• Even if you think returns are there, market confidence is crucial
to ‘sell-ability’
• Every solar company lost money in 2012/13 apart from a few that
had long-term portfolio contracts in place
• Debateable that companies have recovered from last crash
• Lots of people stuck around because they believe passionately in
renewables; vocational calling
• Margins dropped as market became oversupplied
• People leaving the market ran jobs at cost or less to shift excess
stock
• Beware of being ‘busy fools’

23. Official Solar Energy Partners of
@jojusolar
jojusolar.co.uk
@DrChrisJardine
Wishing you the best of luck!
Thank you for your attention!