Fears over solar PV viability are 'wholly misplaced', says industry

Published:  16 May, 2012

All four major trade associations representing domestic solar PV have joined together to 'set the record straight' about the current status of solar power and the Feed-in Tariff (FiT).

The associations said they were concerned the public may be confused about solar power and the Feed-in Tariff, and that they would "like to take this opportunity to clarify the situation".

The FiT was launched in spring 2010, designed to offer returns of up to 8% to homeowners looking to generate their own renewable electricity – tax free, index linked, and guaranteed for 25 years.

Since then over a quarter of a million domestic solar installations have been installed under the scheme, with a total capacity of over 1.3gW.

The associations believe the market is now stagnant, however, with a significant drop in the number of installations because of consumer confusion.

The last six months have seen a stream of headlines about 'drastic cuts', an 'illegal consultation', 'legal wrangling' and 'huge job losses', which the associations believe have obscured a more important truth.

Thanks to drastically falling costs, solar PV remains one of the best investments around, shielding customers from rising energy bills and generating an income to boot, while helping fight climate change and strengthen energy security.

A 4kWp system, the largest size for which the highest tariff is available, can be purchased today for under £9,000, whereas only one year ago it would have cost upwards of £15,000. An average domestic system requires around 2.5kWp.

There is also concern that the slip into a double-dip recession is suppressing demand from worried consumers.

In fact, the association says the cost of solar installation has fallen faster in the past year than any other energy technology, leading mainstream analysts to expect solar power to be cheaper than buying electricity off the grid before the end of the decade.

"Solar does have a bright future in the UK. It is an exciting and popular technology. Tariffs will reduce over time in line with these significant cost reductions, with the industry keen to keep rates of return roughly within the same target range," the associations have said.

They added that 50% of UK housing stock already meets the energy efficiency requirement for the higher tariff, and that for those who don't, the government's Carbon Emissions Reduction Target scheme places an obligation on energy providers to subsidise domestic energy efficiency measures, up to 100% of the cost in the case of low income households.

Dave Sowden, chief executive of the Micropower Council, said: “Solar PV still offers attractive returns for consumers, in excess of many alternative investment products. Improving consumer understanding of solar PV and the Feed-in Tariff scheme is likely to be key to restoring healthy uptake levels.

"We are pleased that the policy framework is now on a more stable footing and are optimistic that this will signal a new dawn of consumer confidence in the microgeneration sector.”

Paul Barwell, chief executive of the Solar Trade Association, added: "There is no financial explanation for the low installation levels we’re currently seeing. The main reason seems to be a lack of clear information for the public – an informational deficit which industry is today seeking to redress."