One year on from the Feed-in-Tariff ending we see a thriving solar industry
Today (1st April) marks the first anniversary since the UK government removed all Feed-in Tariff (FiT) payments for new solar PV systems.
The FiT was introduced back in 2010 to stimulate up-take of renewable energy systems and it worked well for the Solar PV sector. We saw a boom of companies supplying systems to forward thinking farmers installing Solar farms, domestic users on the roof of their homes and company owners seeing the attraction for their businesses. However, sharp cuts to the FiT in 2012 and 2016 caused the market to all but crash, twice! So, when it was announced the government would call time on the FiT, the general reaction in the press was utter dismay and a gloomy future was portrayed.
However, Mypower could see that, despite the severe FiT cuts, the commercial and environmental benefits of solar would continue to grow in strength. Panel manufacturing advancements and global demands for solar would lead to a fall in panel supply costs, and this coupled with rising electricity prices led us to predict our customers and the industry would be better off without subsidies.
Since 2010 we’ve been installing award winning solar PV systems in the commercial and agriculture sectors, so we’ve plenty of practical experience of how the tariff system works and have ridden those waves over the decade. The many conversations we’ve had with companies and farmers over the years led us to conclude that the FiT actually reduced buyer’s confidence causing concern, wrongly, over the unpredictability to the long-term economic benefits companies could expect to receive from solar. Now, when we give a customer a detailed breakdown of financial returns, they are calculated with added confidence as there is no FiT to factor in.
The tariffs also gave some negative perceptions of solar energy… if it’s a proven technology, why did it need supporting? It gave way to some doubt that Solar PV was a reliable investment and the amount of administration involved with the FiT also put off some companies. Although, at the time Mypower took away this headache for businesses by completing all the paperwork on their behalf.
Looking back, the Feed in Tariff definitely provided the stepping stones the industry needed to later establish itself. Along the way it did create a boom and bust effect but this can be the case with many new and growing sectors.
So what’s the current situation on this first anniversary of the FiT abolition?
We can say with confidence that the sector is better off without the subsidy. Since April last year, we’ve been handling a rapidly increasing number of enquiries from companies interested in generating their own electricity, and doubled the amount of solar capacity we’ve installed compared to 2018. The graph below shows the total kWp of solar we have installed annually over the last 10 years...
Why is this?
The table below compares solar PV systems installed by Mypower between 2012 and 2020. Each system is of a similar size (100 kW) producing around 91,500 units of electricity per annum. The figures are based on 60% of the solar generated electricity being used on site by the businesses and 40% being exported and sold to the grid. This shows that businesses can buy low cost electricity and make excellent financial returns from solar. In 2020 ROI is at its highest level ever and payback is at its lowest level ever.
Better now than ever
But the most convincing evidence comes from our clients who installed solar PV with the FiT and are now adding more PV capacity even though they won’t be receiving further subsidies.
William Gilders (a waste transport and treatment services company) based in Teddington, Gloucestershire, is currently adding 2 new solar power systems to the one installed pre-April 2019. The new ones are cheaper to install than the previous ones and will provide cheaper electricity even without subsidies: 4.27p/kWh in 2020 compared to 5.89p/kWh pre April 2019. Grid-supplied electricity is currently around 14.5p/kWh. Payback time is also shorter, ROI is greater plus these prices are fixed for at least 25 years – the average life of the PV system.
Companies are seeing that solar PV offers them clean, green energy, generated from their roof at a third of the price of grid supplied electricity. Creating their own supply of electricity reduces their costs and protects them against the volatility of the energy market and rising electricity prices.
2020 and beyond
2020 marks our 10th anniversary and since 2010, we’ve installed 46,200 PV panels producing more than 10 million units of electricity each year which saves 3,300 tonnes of CO2 from being released into the environment annually, the same as planting 16,500 trees each year. In 2016 we made history when we designed and installed 150 solar PV panels on the roof of Gloucester Cathedral. Mypower was winner of the National Solar Power Portal Awards 2017, winner in the CorporateLiveWire Energy & Mining Awards 2017, and highly commended in both the British Renewable Energy Awards 2017 and the SW Energy Efficiency Awards 2017.
We’re confident that this demand for clean energy generation will continue to increase in 2020, despite the current global coronavirus pandemic. Businesses are certainly still looking to reduce their impact on climate change and to reduce their operating costs, so we’re looking forward to our next 10 years and helping them achieve these goals.
For more information, advice and a budget estimate to demonstrate the value that solar PV can bring your business now and for the long term please contact us.