UK Solar Prices Tumble, Boosting Rush of Installations


Image credit: Solarcentury

Earlier this year, my parents installed solar PV panels on their home in England. Not long after, my brother installed solar panels too. As solar prices ahve tumbled, and householders have reported higher than expected returns, more and more households are taking the plunge. (Four of my parents' neighbors now have solar.) But can it last? And should it?There's no doubt that the introduction of renewables feed-in tariffs in the UK played a major role in kick starting the industry, and shifting the economics for individual households to make solar more attractive. But the Guardian reports that a dramatic fall in solar module prices, combined with lower installation costs that come with economies of scale, means that solar is now an even more attractive option for homeowners than it was a few short months ago—but homeowners must act now to take advantage before a major government review is planned:

Solar experts say that as a result of the installation costs coming down, the investment value of the scheme has become even better. These lower installation costs, an inflation-linked increase to the feed-in tariff payments and the prospect of rising electricity prices all mean the guaranteed returns are now above 10% a year, depending on how you calculate it. And if you install before next April - when new payment tariffs look set to come into force - you are guaranteed the tariffs for the next 25 years at the old rate.

Of course, there have always been those who argue that feed-in tariffs are a rip-off—that they promote a technology not well suited to the UK, and that they amount to little more than a subsidy for the better off. On one level, the case study of my parents would most likely confirm this—their community is certainly not at the bottom rung of property prices or personal income. But, on the other hand, their installation has proved remarkably effective—both in terms of power generated and financial returns. This from my Dad's email:

Just thought you might like to know the results of our first full quarter with solar panels. This was mid-March to mid-June

Units consumed 1946
Units generated 1125

Remember we use electricity for everything, cooking, heating, water heating!
Remember also we were away for 1 month of the quarter. The cost of electricity consumed was £274.03. due to the subsidy effect the income was £504.59

There will, of course, be those who complain about feed-in tariffs as a welfare scheme for those who don't need it. But the whole point of the scheme was not welfare—but to tip the balance to kick start an industry that competes with unfairly cheap fossil fuels that don't pay their way in terms of pollution or their social and health impacts. Instead, the feed-in tariffs provide income for a job-heavy industry that is far from a level playing field. (The fact that homeowners get a little extra cash in their pockets to spend in a still struggling economy may prove to be a useful economic stimulus, but it is a secondary issue.)

With ferocious cost reductions continuing in the solar industry, it may not be long before these subsidies become obsolete. In the meantime, there will, of course, be those who complain that these payments fly in the face of a supposedly free market. But given what we know about the externalized costs and impacts of fossil fuel use, I would argue it was never really free in the first place. But then, I probably would.

More on Solar in the UK
Going Solar Revisited: Lessons from my Parents
Feed-in Tariffs Prompt Rush or Interest in Solar
Are Feed-in Tariffs a Rip Off?

Tags: Alternative Energy | Solar Power | United Kingdom

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