With the continuing decline in the level of the Feed-in tariff, will solar still remain an attractive investment?
Whilst the policy on the FiT may change between governments, the UK will at some point see the FiT disappear for domestic installs – possibly by 2020.
The trend to lower prices for solar
Many would argue that in the UK we have become too reliant on the FiT, with the prospect of earning a financial return on a solar PV system being as appealing as the potential savings on your energy bill. Will UK consumers still find solar PV attractive without the FiT?
The assumption is that a number of factors will combine to maintain solar’s status as an attractive investment. These include a continuing decline in prices; the development of higher wattage solar panels and a continued rise in energy prices.
Research by Solar Business Focus suggests that the average price of a 4kW system would need to fall to somewhere in the region of £4,500 for solar to remain popular. In 2014 the average price was £6,500. Is this possible? Their analysis anticipates that Minimum Import Pricing (MIP), which currently protects the UK from much cheaper imported solar products, will have disappeared 4 years before we reach 2020, which should lead to increased competitiveness and price reductions.
Continued innovations in technology will result in more efficient panels, with the market moving to adopt 330 watt panels (perhaps higher by 2020?) as standard. This has two positive consequences. First, you will need to purchase fewer panels to achieve your desired annual electricity generation, which will lower both the cost of the system and potentially the cost of installation. Second, more efficient panels raises the appeal of solar amongst consumers with smaller roofs, for whom a solar PV system is not currently worthwhile.
Even when you will not be able to benefit financially from the FiT, with energy prices predicted to only continue on their upwards path, the cash savings you will make off your electricity bill will only increase too.
When you combine all of the above factors together, the predication is that by 2020, the time it will take for you to payback your capital investment in solar will be more or less the same as if you had installed solar in 2014.
Giving the consumer confidence in PV
In a post FiT UK, the consumer will need to be confident that solar will deliver. Without the financial benefit of the FiT to fall back on, consumers will compare installers on not just their expert advice, but also the added value services they offer.
These services are available today and are offered already by all Energeasy Solar installers. They include the ability for you to be able to monitor your estimated daily generation vs actual, using a monitoring system that displays both. They also offer an annual panel cleaning service, which helps to ensure your PV system continues to perform to its maximum level possible.
Energeasy solar installers can therefore offer you greater reassurance about the performance of your PV system, backed up by a “tangible” 5 year Production Guarantee, that has the potential to pay out in the short term if your generation falls below what was estimated.
A change of attitude amongst consumers is undoubtedly required, with the motivation to purchase PV in the future being based on saving energy, in order to protect themselves from future predicted energy price rises.
Responsibility also lies within the industry as a whole to help educate consumers; capitalise on the advantages of more efficient panels and give consumers the confidence they need to invest in PV in the face of a declining and disappearing Feed-in tariff.
Source: Rexel Energy Solutions & Solar Business Focus