Solar Sales Drop 90% After UK Subsidies Slashed

Richard Masoner/CC BY 2.0

When the UK government introduced feed-in tariffs for renewable energy it launched a massive surge in solar installations. My parents' street saw solar panels going up everywhere, and there was a temporary rush of large-scale solar park developments too.

But it was not to last. First, the subsidies to large-scale producers were cut. Then a heated legal battle ensued over the future of subsidies to individual households. Now the dust is settling, government cuts have finally kicked in, and everyone is waiting to see what happens to solar installations.

With rates going down from 43p/kWh of energy generated, to 21p/kWh as of April 1st—solar companies were already expecting a significant drop off in orders. But with the Guardian reporting a drop of 90% in new installations, it looks like the industry is in for a very rough ride. The trouble is, having argued heatedly that such rapid cuts would be catastrophic to a fledgling industry, now solar companies have to convince customers that solar is still a viable proposition:

"Many householders are aware that government has slashed subsidies," Barwell added. "The challenge for us is to make householders aware that's partly because industry has slashed costs, and partly because solar is so popular. There is no doubt that financially solar remains a great prospect for UK homeowners so there is no good reason why the UK market should stagnate."

As usual, the argument is not necessarily about whether to subsidize solar, nor even how much, but rather how to structure subsidies in a way that they are predictable, dependable and geared to phase themselves out. And how to manage those subsidies when market forces beyond the Government's control lead to massive cost reductions and a subsequent installation bubble.

Let's hope that whatever comes next in terms of support for renewables, it will be at least a little more predictable.

Tags: Economics | Renewable Energy | Solar Power | United Kingdom