News Article
The 20 GW Road The UK Has To Travel
With cumulative solar PV installations in the UK breaking the 2.5 GW barrier in April 2013, understanding what the drivers have been, and which regions in the UK have benefited the most, can help explain some of the challenges ahead in reaching the 2020 target deployment levels. Finlay Colville, Vice-President at NPD Solarbuzz discusses the new UK solar PV landscape and looks at how 20 GW may be achieved.
During April 2013, solar photovoltaic (PV) demand in the UK broke through the 2.5 GW barrier, confirming the explosive growth within the past three years. At the start of 2010, cumulative solar PV deployment in the UK was less than 40 MW. But with the introduction of feed-in-tariffs (FITs) at the start of 2010, declining module and system pricing, and attractive returns from renewable obligation certificate (ROC) availability at the end of 2012, the solar PV industry has truly flourished and this has put the UK on the global PV stage at last.
Drawing on over ten years analysing the UK solar PV market, and performing detailed analysis on a UK-specific database that now includes over 1,500 commercial PV projects, this article shows the PV application segments and the geographic regions that have contributed to the 2.5 GW of cumulative PV in the UK, and reviews the key issues confronting a new energy segment seeking to participate within the UK's long-term energy supply needs.
The Drivers for PV in the UK
On 16 April 2013, Greg Barker, the Minister of State at the Department of Energy and Climate Change (DECC), tweeted the following from @GregBarkerMP: "#SolarPV continuing to make real progress. Latest stats show [UK] #Solar up from 1.8 GW in January to nearly 2.5 GW now. Staggering! #Green Ambition."
To the casual observer, it could have been inferred that a long-term objective had finally been realized! But very few, if any, seasoned followers of UK PV activity had remotely contemplated this landmark achievement just a few years ago.
Indeed, solar had been a second tier renewable technology for years in the UK, largely dismissed by most politicians in the past as too costly, and rarely mentioned alongside wind, biomass, nuclear, tidal or wave energy aspirations. However, the government recently established a Solar PV Strategy Group and is about to release a solar-specific working document outlining the role of solar within the long-term energy mix for the country. Furthermore, the speculative "˜20 GW by 2020' phrase has now become embedded as an "˜unofficial binding' target of sorts, adopted by almost everyone in the UK as a tangible litmus test of the government's real commitment to solar PV.
Solar specific rhetoric aside, the UK continues to struggle with its renewable energy strategy, with no shortage of disparate views from respective politicians across the political spectrum going back well over ten years. Reclassifying nuclear as "˜green' on account of CO2 emission levels was previously tabled within the context of hitting European, National Renewable Energy Action Plans (NREAPs) target levels. All sorts of proposals have been suggested, rejected, re-introduced and so on, with the latest debates on the viability of the Severn Estuary barrage tidal project and the introduction of shale gas production providing further examples of the uncertainty that prevails at the policy-making level.
But without dwelling too much today on any pessimism, it is beyond dispute that solar PV is getting increased prioritization and serious consideration in future policy implementation in the UK. In the background however, there are several factors that are strongly influencing this also; continued public objections to wind deployment, political sensitivity to signing off on new nuclear plants, risks from unproven shale gas and tidal approaches, and rising electricity bills at the consumer level causing mistrust in energy providers and policy-makers alike.
But, with solar PV deployment passing the 2.5 GW level, the industry now has an installation-base upon which to showcase its capabilities. In the past, solar PV had no reference point to highlight its credentials in the UK other than a few token-gesture pilot demonstration installations, merely adding to the curiosity tag that largely accompanied any related public debate.
There are likely plenty who may choose to disagree, but perhaps the strongest driver for PV in the UK is Greg Barker. While many industry participants have bemoaned the FIT cuts in the UK and the European Commission drama that is playing out now regarding Chinese import duties, the situation in the UK for the PV industry could be much worse. (Small consolation for the installers that have gone under owing to the rooftop FIT boom-and-bust phase of 2011-2012, but it has to be remembered that FITs were never originally envisaged to create a sustainable GW residential rooftop market in UK.)
Regardless of any hidden agendas or political point scoring allegations, the UK solar PV industry can only thrive if it is championed directly by DECC and in this regard, Greg Barker has hit the mark way beyond any others in the past, in relative terms. But the goal now is not so much DECC buy-in, but George Osborne and the Treasury where there is limited evidence until now that DECC's new-found solar PV optimism has been fully absorbed.
Reaching the 2.5 GW Level
Cumulative PV demand in the UK reached 2.43 GW at the end of the first quarter of 2013 (31 March 2013), and passed through the 2.5 GW level by the middle of April 2013 (confirmed by Greg Barker's tweet). It will pass through the 3 GW level during the calendar year 2013.
Depending on whether you use the 20 GW or 22 GW nominal target figures by 2020 that were cited in the 2012 Impact Assessments, this basically means that any solar strategy that seeks to hit these levels by 2020 would require some kind of carve-out for solar PV in the UK that encompasses 17-18 GW of new solar PV capacity over a 7 year period.
Therefore, back-of-the-envelope calculations suggest that "“ failing any boom and bust phases "“ UK solar strategy is largely governed by the requirement to add approximately 2.5 GW per year for the next 7 years, notwithstanding grid infrastructure, utilities acceptance, council planning permission and policy changes! So, the fact that the UK has just reached its first 2.5 GW of solar PV does represent a key moment and deserves some retrospective study now.
Figure 1 illustrates the historic growth to April 2013, and getting to the 2.5 GW level of installed PV in the UK. Growth during 2010 and 2011 was dictated exclusively by FIT allocations. With the exception of some ground-mount PV farms that beat the 2011 cut in large-scale PV FITs, initial UK growth was driven by the residential segment. This included mostly new builds, retrofit installations and social housing projects.
Figure 1: Cumulative solar PV installed in the UK and the growth to the 2.5 GW level. The strong uptake in March 2013 was driven by the deadline for large-scale solar farms to qualify for the 2 ROCs/MWh rate. Source: NPD Solarbuzz, June 2013.
Actually, that the residential segment (and especially the social housing aspect) was the driver for PV in the UK was largely in line with the underlying ambitions of the former labour government and the coalition government that inherited existing FIT policies for PV; empowering less affluent communities or showcasing solar PV from an educational perspective.
But none of the policy makers had foreseen that global PV module and installed system pricing would nose-dive just as the FITs became available. Consequently, PV adoption under most of the PV FIT categories grew way beyond DECC's expectations and, for 12 months from the middle of 2011, DECC was largely in catch-up mode to adjust PV's allocation within overall FIT budget levels.
Just as the UK PV industry started to envisage a drastic slowdown, with FIT allocations restricted to a declining number of residential-only PV rooftop installations, the ROC scheme would emerge as the saviour to the PV industry.
ROCs had never been envisaged for the PV industry when originally introduced in 2002; the main driver was offshore wind. Interestingly, in 2008 as new legislation was being considered for solar PV, there was speculation that ROC tariffs at the level of 5 ROCs/MWh would be introduced for micro-generation schemes that incorporated PV. (FITs were chosen in the end.)
But, as global solar PV module and installed system prices continued to decline during 2012, and UK-focused project developers became savvy in the large-scale ground-mount PV application/deployment process, ROCs appeared to be just perfect for the ground-mount (and large commercial rooftop) segment.
It should be noted however that the marriage of PV and ROCs did require new policy legislation, and for a few months at the end of 2012, there was a very real concern that the dangling ROC carrot could be pulled away. In reality, the fears were largely unfounded, and what emerged was a great deal for the PV industry at the time: dedicated ROC clarity to 2017 for each of the ground-mount and large rooftop segments, and a window to the end of March 2013 that solar PV would still qualify for the attractive 2 ROCs/MWh level.
Large-scale ROC-enabled solar PV in the UK during the final quarter of 2012, and particularly during the first quarter of 2013, has been the catalyst in propelling cumulative solar PV in the UK first above the 2 GW level and then the 2.5 GW mark within the space of three months. By the end of April 2013, over 500 MW of solar PV had been installed under the ROC scheme, with over 400 MW in Q1'13 alone.
Geographic Mapping of UK PV Installations
In addition to segmenting the 2.5 GW of UK solar PV across the various funding mechanisms (FITs, ROCs or the legacy Major Development, Low Carbon Buildings and Solar4Schools programmes) and the different applications (residential, small and large commercial rooftops, ground-mount, etc.), perhaps the most interesting analysis comes from the geographic split across the UK.
Figure 2 follows DECC's regional geographic segmentation and uses a variety of historic and current government statistics, the in-house NPD Solarbuzz commercial database of UK solar projects that exceeds 1,500, and further UK PV industry channel checks and surveying. The result of this analysis is the first ever comprehensive mapping of the 2.5 GW of solar PV installations, shown by region and by segment, across the whole of the UK.
Figure 2: Installed solar PV in the UK, for the 2.5 GW at April 2013, showing the relative MW deployment for each PV application segment in all regions within the UK. Source: NPD Solarbuzz, June 2013.
Solar PV application segments shown in Figure 2 include: residential (almost exclusively FIT-based), small rooftop (again mostly FITs), large rooftop (mostly FITs, but some legacy funding mechanisms and some new ROC based projects) and ground-mount (now dominated by ROCs). The vertical bars across each of the segments and regions are auto-scaled to illustrate the relative MW levels by application and geography.
Contrary to some popular opinion within the UK, solar adoption across the various regions in the UK is not dictated by solar insolation rates between the north and the south. Yes, this is a factor, but it ranks down the list of factors that has driven deployment in one region compared to a neighbouring region (or indeed adjacent county, district, or farm) that has exactly the same photonic exposure.
Rather, regional deployment should be considered as having additional layers of selectivity, all falling under the generic UK-wide policy umbrella. These layers include: the enthusiasm of regional and local councils to solar PV farms, land availability (greenfield or brownfield), local grid infrastructure, the presence and sales ability of downstream channels focused on key counties, the locations of commercial rooftops owned by national brands such as Sainsburys and Morrisons, the sites chosen for new residential builds with integrated PV, and many other non-DECC policy related themes.
Various other devolved decision-making legislative powers assigned to Holyrood, Cardiff Bay and Stormont also play a role in solar PV deployment as part of any complementary renewable energy goals for Scotland, Wales and Northern Ireland.
With many of the above factors in place, the South West region (driven by Cornwall, Devon, Dorset Somerset and Wiltshire) is the clear leader for PV deployment, topping the regional charts for all application segments shown here; by MW volume, the South West accounts for 27% of the first 2.5 GW installed in the UK.
Residential demand is broadly spread across all regions in the UK (with only Northern Ireland yet to contribute any strong demand), often with regional-focused installers closely managing local activities. The situation for ground-mount is heavily biased to the south, with the South West and South East (mainly from Hampshire, Kent, the Isle of Wight, Oxfordshire and Sussex) collectively accounting for over 70% of all ground-mount MW deployment.
In fact, anyone flying in regularly to some of the smaller domestic airports at Exeter, Newquay or Southampton will testify at first hand to the large-scale PV revolution at ground-level. As an example of this, Figure 3 was taken when I flew into Exeter Airport a couple of months ago on FlyBe, with the distinctive Bombardier Dash 8 Q300 propeller clearly visible out the window, casting a shadow on another new MW solar farm in Devon, built close to the runway at Exeter.
Figure 3: One of many new solar PV farms in the South West of the UK, photographed from an internal flight in the UK, landing at Exeter Airport. Source: Finlay Colville, April 2013
Future Considerations
The UK PV industry is currently (and quite naturally) somewhat pre-occupied by the Europe/China trade case that is seeing increased political volleyball activity between Brussels and Beijing. But trade cases and domestic protectionism (including local content based incentives) have been part of the PV industry for many years, and the World Trade Organization has even been called to adjudicate in the past between different countries.
The PV industry has never really had any prolonged period of stability beyond a few quarters, and has been in constant turmoil as it has grown from the GW-level of a few years ago to the 30-40 GW range today. However, business models have evolved constantly and, regardless of what the EC decides (and however the China reacts), downstream PV deployment in the UK will more than likely prevail in one form or another.
In fact, the Europe/China issue is definitely clouding the more pressing long-term issues for solar PV in the UK; lobbying to influence the solar UK steering committee on the contents of the solar strategy documentation set to be unveiled shortly, getting PV on the table beyond 2017 when ROCs are potentially no longer available, addressing the very real threat from the anti-solar public voice that could quickly grow from a nuisance into a real threat, identifying how to open up new regions to decrease the dependency on the South East and South West, getting a professional PR agency on board to sell PV to the public, having UK's big-six suppliers fully embrace solar as a no-brainer revenue-stream, factoring in the impact of new DECC personnel (or a new government) after May 2015, and so on.
If 20 GW is to be achieved by 2020, the next 17.5 GW will have to be less painful to the UK PV industry than reaching the first 2.5 GW base. And if the UK can present a strong case for a risk-free 2.5 GW annual PV market for a 7-year period out to 2020, then finances and resource from global suppliers and downstream developers will not be a problem. But as with many things in PV today, this is an "˜if' question and there is no shortage of potential roadblocks that will have to be overcome to get there before the 20 GW landscape-map is unveiled in full glory.
About the Author
Dr. Finlay Colville is Vice-President and leads the global PV analyst team at NPD Solarbuzz. Based in the UK, Finlay has been active in the PV industry since 2005. He regularly delivers keynote talks at high-profile industry events and is a frequent contributor to leading trade magazines and online newsletters.
