UKPVC 2010 Jeremy Leggett - Customer experiences in the UK PV market- what do they want?
on the UK
• Background to UK market: the journey to the feed-in tariff
• Structure of tariff and government objectives / expectations
• Pricing: future and present
• Market growth projections
• The coming energy crisis
BIPV, BAPV, BIST, system integrator and product developer ….rare!
In-house R&D & IP!
>40% annual revenue growth 2005-2010 driven by own product design!
Ofﬁces in UK, France, Italy, and Spain: 120 employees!
Manufacturing partnership with Sony!
Investors: leading PV-focused VCs and SSE plc!
Awards include CSR Project of the Year 2009 (with SolarAid), and:!
Best overall "
new product "
Solar irradiation in Europe"
irradiation to Germany:
Germany worlds largest
solar PV market
UK PV: a very long journey"
! “This Government is
serious about solar energy.
I want to see thousands,
rising to tens of thousands
of roofs covered by solar
panels every year over the
next ten years, rivalling the
large programmes in
Germany and Japan.”!
Energy Minister Peter Hain!
2001-2010: The reality"
• Token government
grant programmes !
• Stop-start “support”!
• “Demonstration”, not
• Market dependent on
• Solar PV sidelined in
Government policy after
2003 Energy White Paper!
• Emphasis on innovation
and bespoke installations ! Sept 2004
But tiny as the market is, you can see it from space
C21, Yorkshire, UK!
A key driver: the UK Building Code"
Zero Carbon" Renewables essential
each year !
Social Housing >50k units PA! Private Housing >100k units PA!
Political and cultural barriers to PV in the UK"
• Carbon Trust dismissive of 2nd
generation solar PV in UK!
• Renewables Advisory Board
• “Big is Beautiful” cultural
mindset in government!
• Nuclear or renewables?!
• A small but highly vocal amount
of contrarianism from prominent
Solarcentury FiT demonstration
outside Department of Energy and
Climate Change, 2009
So how did we get a feed-in tariff?"
• Not by keeping quiet!
• Support from opposition
parties + key Labour MPs!
• Commons pro-solar PV
motion second highest
supported in 2008/9
• Massive business, trade
union, fuel poverty lobby
and green NGO support!
Representatives of five construction
industry sectors deliver a letter to
Number Ten, 2009
Key journalists became
convinced by economics"
• 3.5 % p.a. with no grant
• 7 % p.a. with 50% grant
• 10% with a 45p feed-in tariff
Solar PV tariffs launched 1 April 2010"
• Plus export tariff statutory minimum 3p/kWh!
• Generation tariff paid regardless of onsite use!
• Index linked to inﬂation for 25 years!
• Tax free for households only!
• Tariffs unchanged to April 2012!
• Annual 9% degression thereafter for new customers!
• No BIPV premium!
UK Government feed-in tariff approach through 2020"
• Less than 2% of UK electricity by 2020 from ALL feed-in
• Set tariff levels to deliver no more than a 5-8% ROI!
• “an 8% ROI is assumed to be insufﬁcient incentive for
utilities and developers”!
• Aim: to balance “cost-effectiveness, contribution to the
2020 renewable energy target, engagement at the
household level and compatibility with broader energy
• Target: over 700,000 household micro-generation
installations forecast by 2020, mostly solar PV, enough
“achieve a level of public engagement that will engender
widespread behavioural change”!
Government expectation of future PV pricing in the UK "
• 2010 global average price of a fully installed PV system:
£ 2.75 Wp (€3.25, $ 4.00) [Barclays Capital]!
• 2012 global average price of a fully installed PV system:
£ 2.23 Wp (€2.64, $ 3.25) [Barclays Capital]!
• 2015 UK Government average price expectation: !
• for a 2 kWp domestic retroﬁt system: £3.25 Wp!
• for >100 kWp installations: £2.25 Wp !
• By 2020: more than 100% drop in prices
(and PV tariffs of 12.7p-18p/kWh to reﬂect this)!
Larger UK systems in 2010: 100kWp example"
Roof area:! 2,000 m2 roof!
Output:! 84 MWh pa!
Price:! £350k* (£3.5 Wp)!
Tariff:! 31.4 pence/kWh!
Electricity:! 9 pence/kWh
IRR:! 7.7% (100% equity)!
*Subject to Module prices and complexity of project
Larger UK systems in 2010: 1,000 kWp example"
Roof area: 20,000 m2 ﬂat roof!
Output: 840 MWh!
Price: £2.9m* (£2.9 Wp)!
Tariff: 29.3 pence per kWh (index linked)!
IRR ~16% (assuming 20% equity)!
Inc fully monitored O&M !
*Subject to Module prices and complexity of project
Views of UK PV market growth"
• Nomura Code: 100 MW • EPIA: 20-40 MW in 2010
80-100 MW in 2011
• PWC: lag in 2010
1 GW by 2015
4 - 6 GW by 2020
The UK civil service expects only a modest UK PV market"
• Recent PV industry speculation about the potential size of the UK
market by 2020 needs to be put in context: he overall scheme
ambition is a very modest one!
• Under a business as usual approach (ie no feed-in tariff) the
Government predicts 3TWh or 0.8% of ﬁnal UK electricity
consumption from ALL sub 5MW renewables by 2020. !
• The chosen scheme increases the business as usual ﬁgure to 6TWh
from all sub 5MW installations of which approximately 1.75TWh
comes from solar PV (or on average around 200 MWp installed per
year over the next ten years).!
Total sub 5MW renewables installations (all technologies by
investor category) expected by 2020 under the FIT"
Domestic – ! ! 744,000 (vast majority of them PV)!
Commercial – ! 25,000!
Developer – !! 1,000!
Utility – ! ! 2,000!
! ! TOTAL:! 777,000!
Source DECC Impact Assessment of Feed-in Tariffs 1 February 2010!
The change of government and the future"
• All the indications are that the coalition Government is
going to let the FIT scheme it inherited bed down !
• While in Opposition, all of the key Ministers in the new
coalition Government backed our We Support Solar
• But even assuming that the coalition government is
perfectly relaxed about the treatment of small-scale
renewables in the current scheme, we cannot presume
that the lobbying “job is done.” !
• Regular reviews will cover all aspects of the policy including whether
technologies should remain within the scheme at all!
• The ﬁrst scheduled review (after lobbying, and subject to no change
from the new Government) will start formally in 2012 for changes to
be implemented from March 2013. !
• In making that decision, the Government also signalled its intention
to increase the degression level from later years and promised that !
! “the ﬁrst review period will be an opportunity to consider
! whether this increase should be maintained or indeed
increased ! as may be required should the cost reductions
that the industry ! have delivered historically be continued or
• Brand new scheme which will take time to “bed down” with Ofgem
and the supply companies!
• Microgeneration Certiﬁcation Scheme for both products and
installers, and the urgent need to keep cowboys out!
• Grid connection and planning issues particularly for non domestic
• Raising awareness of the scheme and the technology!
“The next ﬁve years will see us face another crunch –
the oil crunch. This time, we do have the chance to
prepare. The challenge is to use that time well. …..Our
message to government and businesses is clear. Act.
…..Don't let the oil crunch catch us out in the way
that the credit crunch did.”!
• The UK FiT is an effective scheme for solar PV but with
limited scope and with clearly deﬁned 2020 “targets”!
• It took a decade-long lobbying campaign to secure
support for PV tariffs!
• The scheme should deliver sustainable PV growth in the
UK year on year !
• But an ongoing lobbying effort will be needed to secure a
decent settlement for PV in the ﬁrst tariff levels review
beginning 2012 !
• There will be wild cards – factor in peak oil!