Despite gloomy skies over much of the country this summer, Britain has experienced a sunshine boom – solar power capacity has risen by more than 18-fold since last year as homeowners and businesses rush to take advantage of subsidies.
From April to June this year, nearly 34 megawatts (MW) of new solar generating capacity was added to the UK grid – the biggest amount ever in a single quarter, bringing the UK’s total capacity to nearly 122MW. This represented more than 14,500 new installations in the last quarter alone, compared with the UK’s total capacity of only 2,700 solar panel systems in use by the end of March 2010, according to newly released figures from the Department of Energy and Climate Change.
The government’s new feed-in tariffs (Fits) have fuelled the boom, making photovoltaic panels an attractive investment as owners receive a steady income stream for the power they produce, as well as being able to use it to offset their energy bills.
However, the boom is in danger of faltering in the coming months as changes to the feed-in tariffs begin to bite. Larger solar farms or parks face sharp reductions in the subsidies available, after ministers decided to restrict most of the funding to smaller installations, such as households and small businesses.
The changes – coming into effect from 1 August – mean that large installations, of more than 50 kilowatt (kW) capacity – enough to cover a large field, around 20 houses or a typical school – will lose the higher rate of subsidy and be eligible only for a lower tariff that some developers say is not enough to make them economically viable. Projects completed before Monday will continue to qualify for the higher rate, at least until the next review, giving companies a massive incentive to build as quickly as possible.
Solar experts say that developers hoping to build larger installations have rushed to install their systems before the cut-off date next Monday. Octopus Investments said it had funded the installation of 11 large-scale solar power sites throughout England ahead of the deadline, through its partner Lightsource Renewable Energy, which has installed about 118,000 solar panels that should deliver about 26 gigawatt hours of energy each year – enough to power 7,400 homes. All the sites qualify for the Fit at the original rates. Paul Latham of Octopus said: “When the deadline for Fits qualification was brought forward, it posed some significant challenges and there was a lot of gloom amongst funders and developers. Our approach was to look at what could be built within the timescale to qualify for the scheme.”
Installers have had to speed up working: EOS Energy managed to installed a £3m 1.15MW solar farm – one of the biggest in the south-west – for Hendra holiday park near Newquay in just seven weeks, to beat the deadline.
Gehrlicher Solar connected up its project near Plymouth. The Langage Solar Park, developed with Carlton Power, is even bigger, at 5MW.
Some companies have managed to gain a temporary reprieve, of sorts. A loophole in the regulations means that installations of more than 50kW connected before 1 August – which are eligible for the higher tariff – can be added to for up to a year afterwards, with the additional arrays also be eligible for the higher tariff, at least until the regulations can be amended. This has led to a rush of developers striving to complete as many 50kW projects as possible by next week, with a view to adding more panels at greater leisure after the Monday deadline.
However, companies are reluctant to own up to this to avoid the wrath of ministers, who have been trying to close the loophole.
The deadline has also spurred the development of medium-sized projects – bigger than house roofs but less than the 50MW cut-off point. In Cornwall, the charity Community Energy Plus on Thursday announced a £20m fund to help more than 300 local organisations – including schools, charities, community buildings and farms – to install solar panels. The charity estimates that eligible buildings could save up to £7,000 a year on their energy bills if they use all of the energy generated, or an income of £2,400 a year for exporting it to the National Grid.
Neil Farrington of Community Energy Plus said: “We’ve developed this scheme in response to the challenge that many non-commercial organisations face when looking to get their own renewable energy projects off the ground. Many lack the upfront investment to buy a system outright but are also wary of the limitations of ‘rent a roof’ offers.”
Moreover, feed-in tariffs are not the only factor driving the UK’s boom – the price of solar panels has plummeted, making the investment more attractive, and installations costs are also down. HSBC calculates that the cost of solar cells – the key component in panels – has fallen by about 70% since September 2008.
This downward trend could mean that the high rates of solar panel installation of the last few months continue well beyond the mini-boom created by the changes to the Fit regulations.