British Subsidies Trigger `Solar Revolution' Under Rainy Skies
Installing solar tiles on a roof
Si Barber/Bloomberg
Brian Evans of Solar Century fits solar tiles to the roof of a residential property in Croydon, Surrey, U.K.
Brian Evans of Solar Century fits solar tiles to the roof of a residential property in Croydon, Surrey, U.K. Photographer: Si Barber/Bloomberg
A worker fits solar tiles to a residential property
Si Barber/Bloomberg
Brian Evans of Solar Century prepares to fit solar tiles to the roof of a residential property in Croydon, Surrey, U.K.
Brian Evans of Solar Century prepares to fit solar tiles to the roof of a residential property in Croydon, Surrey, U.K. Photographer: Si Barber/Bloomberg
The U.K., known for rain and gray skies, enjoyed record installations of solar panels in July after the government guaranteed prices for electricity from renewable energy up to 10 times market rates.
Photovoltaic panels with the capacity to generate 4.6 megawatts were fitted last month, the energy regulator Ofgem said on its website. That’s more than in all of 2009, according to Bloomberg New Energy Finance, which forecasts the nation’s solar market will increase 12-fold this year.
The government on April 1 introduced feed-in tariffs that fix above-normal prices for electricity from small installations of wind, solar and hydro power. Companies from the German utility E.ON AG to Tesco Plc, the biggest U.K. supermarket, have entered the market. Sharp Corp. is doubling production at its solar cell factory in Wales, which is the biggest in Britain.
“The solar revolution is coming,” said Serge Younes of the industry consultant WSP Environment & Energy. “There are a lot of roofs in the south of the U.K. and a lot of land.”
According to Ofgem, 11.8 megawatts of PV were fitted under the tariff system through today in 4,640 homes and 22 commercial installations. That surpassed the 4 megawatts installed in 2009 and 4.4 megawatts in 2008.
It isn’t just homeowners who are taking advantage of the incentives. As well as selling panels, J Sainsbury Plc, another supermarket chain, may affix panels to its stores. Farmers including Glastonbury music festival founder Michael Eavis are seeking income from placing solar power in fields and on barns.
Tiny Industry
The industry is starting from a low base. According to the global accountancy firm PricewaterhouseCoopers, solar PV represents 0.3 percent of U.K. renewable energy. Total capacity, at 32 megawatts in 2009, ranks Europe’s third-biggest economy at 11th out of the 27 European Union member-states.
“A lot of what is happening is still a cottage industry,” PWC Renewables Director Daniel Guttmann said in an interview. He predicts total installed PV capacity could reach 1,000 megawatts in the U.K. by 2015.
Germany and Spain, which have both had feed-in tariffs for several years and are now trimming them, had installed PV capacity 300 times and 100 times greater respectively than the U.K. in 2009, PWC said.
Sharp’s panel plant in Wales will double annual production to 500 megawatts by February, enough for 1.2 million homes, said Andrew Lee, head of the Osaka-based electronics maker’s U.K. solar unit. Hundreds of jobs will be created, he said. Sales in Britain now account for 10 percent of production, a 10-fold rise over 2009.
‘Dramatically’ Changed
“Before the FITs came in, 99 percent of our sales were for export,” Lee said in an interview. “This is starting to change dramatically.”
The tariffs are guaranteed for 25 years and vary according to capacity and whether panels are fitted to old buildings or new ones. They’re as high as 41.3 pence per kilowatt-hour produced, about 10 times the current day-ahead U.K. power price. Householders can sell unused power to the electricity grid.
One challenge is overcoming the misconception that Britain isn’t sunny enough, said Derry Newman, chief executive officer of Solar Century Holdings Ltd., which builds solar systems for Tesco, Sainsbury’s and homebuilders Persimmon Plc and Barratt Developments Plc.
“It’s the No. 1 myth that we always try to dispel,” Newman said in a telephone interview in London. “The U.K. is fantastic for growing plants. Plants just need light, heat and water. Solar PV just needs the light.”
Of 20 nations surveyed by the European Photovoltaic Industry Association, Britain had the fourth-most gloomy skies, only sunnier than Sweden, Norway and Finland. Average solar irradiation is about 6 percent lower than in Germany, the biggest PV market.
Doubling Work
Newman said Solar Century’s work in the U.K. has doubled since April. It’s working with General Electric Co.’s GE Capital unit to bring solar cells to schools, targeting 60 projects this year, he said. GE will pay the cost of installing panels, and the schools will make repayments over 15 years from income earned on the tariffs. Because the rates pay out for 25 years, the schools enjoy the full impact of the payments for a decade.
Farmers see solar power as a new source of revenue. Worthy Farm, which hosts the Glastonbury Festival, plans to mount 1,200 panels on barns, according to its website.
The National Farmers Union has had a “significant number” of inquiries from financiers and its members about using farmland and barn roofs to host panels, said Jonathan Scurlock, the union’s chief renewable energy adviser.
Chickens and Panels
Farmers are being offered rent of 1,000 pounds to 2,000 pounds per hectare for their fields, more than they can make from livestock or crops, he said.
“We don’t want a food-versus-fuel backlash,” Scurlock said. “We’re looking at things like solar panels mounted to a 2-meter (6-feet) height with free-range poultry running around underneath.”
The U.K.’s four largest supermarket chains, Tesco, Sainsbury’s, WM Morrison Supermarkets Plc and Wal-Mart Stores Inc.’s Asda unit, all are considering whether to install the panels, said Younes, the WSP consultant. Sainsbury’s is examining all options, said Jack Cunningham, the retailer’s environmental affairs manager.
“We can directly invest in that technology for our own purposes,” Cunningham said in a telephone interview. “Or we can even look at renting out roof space and allowing generators to put their PV on our roof.”
Sainsbury, working with Electricite de France SA, Europe’s biggest power generator, has been selling Kyocera Corp. panels since January. Tesco, which declined to comment, is also selling PV panels. So is E.ON, Germany’s biggest utility, which on April 6 announced a “solar saver” plan.
“The U.K. solar sector should boom as a result of these tariffs,” said Jenny Chase, lead solar analyst at New Energy Finance. “The economics for every sort of PV system are better than most other investment opportunities of comparable risk to consumers.”
To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.
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