The UK solar industry is forecast to lead Europe on newly installed capacity in 2015, but subsidy cuts on the horizon and a stagnating European market present continuing challenges for the sector.
Statistics from the Department of Energy and Climate Change (DECC) show that the UK installed 2.5GW of solar PV capacity last year – more than any other European country.
A further 2GW has already been installed in 2015 as installers rush to complete large ground-mounted projects ahead of the latest round of reduced Feed-in Tariff (FiT) rates due to come into force this summer.
From 1 July 2015, FiT payments for newly installed large ground-mounted solar farms will be cut by 28 per cent. The Renewables Obligation (RO) subsidy scheme for solar farms over 5MW has also now closed.
Instead, the industry will be encouraged to focus increasingly on rooftop-mounted installations, where there is a smaller but growing market and solid support from government.
A recent survey from market research firm, Mintel, has found that around 60 per cent of UK consumers who do not have solar panels on their homes would consider fitting them over the next five years, with “rent-a-roof” schemes appearing particularly popular.
According to Mintel, this demand will help to push total UK solar capacity to 11GW by 2018.
Claudia Preedy, senior industrial analyst at Mintel, said: “Although the market remains in its infancy, demand for solar panels has exploded since 2010 and there continues to be strong growth potential.
“Despite frequent changes in government policy and other factors, such as the strong drop in installation costs in recent years, the solar industry has proved resilient and has shown that it can reinvent itself within a changing landscape.”
However, the sector is likely to be held back by a stagnating European market, with upcoming statistics from the European Photovoltaic Industry Association (EPIA) expected to show rapidly decreasing installation rates over recent years.
The figures, which are due to be published this month, show that new solar capacity in 2014 only reached a third of the level achieved in 2011, with employment in the sector halving over this period.
The issue has reignited several debates on how the European market should be structured, particularly regarding import tariffs imposed on Chinese solar panels that are due to expire in December 2015.
The tariffs are designed to protect European manufacturers by preventing cheaper Chinese products from being dumped on the European market, but the EPIA has argued that it is one of the causes behind the market’s poor performance and is seeking to prevent the ‘anti-dumping’ tariffs from being extended.
“Nothing will stop solar now – even if a new government came in and said we are going to stop all subsidies tomorrow, the solar industry would continue on. It’s a world industry and nothing will stop the prices coming down”, he said.