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UK home solar power faces cloudy outlook as subsidies are axed

UK home solar power faces cloudy outlook as subsidies are axed
Issue Time:2018-07-09

“I’m 87% self-powered today. Yesterday I was 100%,” Howard Richmond said, using an app telling him how much of his London home’s electricity consumption is from his solar panels and Tesla battery.

The retired solicitor lives in one of the 840,000-plus homes in the UK with solar panels and is part of an even more exclusive club of up to 10,000 with battery storage.

Richmond and other solar households should reap a windfall this week because of a forecast of sunshine and blue skies, which could result in renewable energy records being smashed.

Solar has grown rapidly in the UK’s power mix. A decade ago it provided virtually nothing; now it regularly generates about a fifth of the country’s electricity for hours on a summer’s day.

Electricity generation from solar panels reached a peak of 9.38GW last Friday, edging close to the record of 9.42GW. The highest percentage of power to ever come from solar was 28.5% on 6 May – and last Sunday came come close with a 27.5% share.

However, the household market has been dubbed the “solarcoaster” by industry, because of the booms and busts driven by the feed-in tariff regime, the main government support scheme, which started in 2010.

Those incentives were slashed dramatically at the start of 2016, largely killing the financial attraction for householders. Installations plummetedand companies folded.

Next April the scheme closes entirely and ministers are yet to signal that it will be replaced.

Unsurprisingly, that has led to a bleak outlook for household solar. Growth halved last year, which the government says is “not surprising”, given earlier rapid expansion.

Only 14MW of domestic solar is forecast to be fitted this year, down from a peak of 606MW in 2011, according to Bloomberg New Energy Finance.

“This is heartbreaking for me,” Alan Simpson, an adviser to the shadow chancellor, John McDonnell, said.

One of the architects of the feed-in tariffs, Simpson said the importance of household solar was not only the clean energy it brings online but the cultural, political and social impact of engaging people with renewables at a local level.

He blames the government and big fossil fuel-based energy companies for bringing household solar to a halt. “We’ve got a completely inverted sense of how the shift into clean energy systems will take place and the role households can play in the process. We disempower and discourage households from being part of the clean energy transformation,” he said.

Solar advocates are pinning their hopes for a revival on the continuing fall in the cost of panels, and complementary technologies, including household batteries and electric cars.

Jeremy Leggett, the founder of Solarcentury, one of the UK’s largest solar companies, said: “It’s in flux but it’s heading in a very exciting direction. We’re coming out of the doldrums, whatever the government does.”

While the former oil geologist admits the UK solar market is stagnant, he thinks the direction of travel is clear.

Household batteries such as Tesla’s Powerwall, for example, enable people to consume rather than export their solar electricity, which makes more financial sense.

An energy supplier sells a kilowatt hour of power to a householder for in the region of 15p, much higher than the 5.24p a solar home can earn for exporting to the grid and the 4.01p for generation under the feed-in tariff.

Ryan McShea of Empower Energy, one of the few solar installers to weather the subsidy cuts, said he had been surprised by the uptake this year. “We’ve found a lot of people going for solar and batteries together.”

Solar panel costs have come down by about a fifth in the past year, he said, which he expected to filter down to cheaper systems for consumers. A typical 4KW array of solar panels costs about £6,000, down from £12,000-£14,000 when the feed-in tariffs began.

That price can come down even more for bulk purchases, the industry pointed out, potentially to as low as £3,200.

While the economics of solar are improving, few think they will stack up in coming years without some form of continued support.

Labour would renew the feed-in tariff scheme at a modest level, rather than let it fade away.

“Basically, this is the long-term consequence of the ‘cut the green crap’ stuff,” said Alan Whitehead, the shadow energy minister, in reference to David Cameron’s reported comments on renewable energy support in 2015.

“We would not want to see the [feed-in tariffs] regime disappear in 2019, we would like to see it continue but on a clear path,” said Whitehead, who envisages funding the scheme with a “tiny fraction” of the £557m ministers have earmarked for large renewable energy subsidies.

A Labour government would take a more holistic view of support for solar, too, he said, such as paving the way for an aggregator to bundle together many households’ solar output and trade it at a local level to other homes that need it.

A helping hand may also come from a backdrop of electricity prices, which are increasing in the face of rising wholesale costs. E.ON this week said it was putting electricity prices up 6.6% from August.

Back in Islington, Richmond looked at his electricity bill, which has fallen to £18 a month for a three-storey terraced house. The financial savings are not his main driver, however.

“My prime motivation was I wanted to see if I could be self-powered in north London in a cloudy rainy country,” he said. “If I can do it, so can the world.”

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