Colin McNaught, AEA Knowlege Leader and author of the AEA Microgeneration Index (http://www.aeat.com/microgenerationindex/) reviews the success of PV market development in the UK at The Solar Future UK Conference 2012.

1. Solar Future
The success of PV market development in the UK
Colin McNaught
26th June 2012

2. AEA
Advised DECC on Auditor for the RHI scheme
Renewables roadmap, RHI, FIT, CHP Quality Assurance
CRC UK emissions inventory
BPVA MCS Installer survey Major provider of
environment and energy consultancy
WRAP PV Industry report
and advice
to the private sector

3. Agenda
• Looking back – trends & patterns
• Looking forward – who & where is the growth?

4. A brief history…
Low Carbon Buildings
LCBP Solar PV:
• 11,490 kWp
• 5,586 sites
• Avg £5,924 per kWp
• £45.5 million grant
Clear Skies
“The gap led to "a
famine". "a lot of
DTI Domestic Field Trial damage to a rapidly-
2002 installs:
growing industry"
• 262 kWp
• 12 sites
• Avg £7,200 per kWp
Source: IEA & DECC

5. The Impact of the FIT
Capacity 1,250 MW 282,000 Installations
Registered schemes – Ofgem 22 June 2012

6. The Impact of the FIT on Solar PV
• Domestic sector = 75% of capacity 97% of installs
Registered schemes – Ofgem 22 June 2012

7. Surges in Solar PV
Certain reduction
43p to 21p/kWh
Possible reduction
43p to 21p/kWh
Energy Efficiency
requirements
• Peak of 29 MW in one week, circa £75 million invested
• 2010/11 around £640 million invested
• Surge around 6 weeks before deadline
DECC 22 June 2012 up to 50 kWp

8. Falling module prices
Source IMS

9. The danger of deflation
• Centre for Economics and Business Research:
“The primary danger is that once deflationary expectations
are entrenched, consumers will delay spending and businesses
will delay investing as this can be done more cheaply in the
future. As a result, deflation can contribute to downward
economic spirals and turn a recession in to a deep and lasting
depression.”
• Tariff cuts may over-ride the impact of deflation
• Difficult questions:
Are tariff cuts needed to motivate buyers?
What happens as the cuts become smaller?

10. Location, Location – Solar PV by Postcode
Focus on Sheffield
Focus on London
Ofgem Jan 2012 Domestic only

11. Which districts have the best market?

12. Scale of Domestic Market
26 Million Homes
26 Million Homes 67% Owner occupied
96% are not flats
50% EPC D
or better
50% Southwards
facing
Less:
- Listed buildings
Target Market - Shaded roofs
4.1 million
homes - Unsuitable roof
structures

13. Scale of Domestic Market
• Around 300,000 installs
• Around 2/3 on single properties (not rent a
roof/social housing)
• So 200,000 owner occupiers
• Or 5% of estimated 4.1 million market
• How do future buyers compare with past buyers?

14. Profiling the market
4.1 million
homes
Early
Innovators Adopters Early Majority Late Majority Laggards
0.10 million 0.55 million 1.40 million 1.40 million 0.66 million
0.3 GW 1.7 GW 4.2 GW 4.2 GW 2.0 GW

15. The next generation of customers
• Innovators – venturesome, educated, multiple info sources;
• Early adopters – social leaders, popular, educated;
• Early majority – deliberate, many informal social contacts;
— More risk averse = De-risk the process and the returns
— Need confidence = They seek the market leader
— Less affluent = Price Matters + Finance Matters
• More Ford Focus than Morgan kit car?
• Need to re-build awareness post the big cuts

16. Moving beyond the FIT
• Increasing the value of export
• Impact of energy price rises

17. A competitive investment
• A £6,000 investment in Solar PV vs. Cash ISAs
• 12 million Cash ISAs in 2010/11 = £38 billion

18. Allies and Partners
• Needed to re-engage and update customers
– On cost, on investment returns, on quality
– Public Sector: EST, Green Deal, DECC…
– Private Sector: Which?, money journalists, banks…
• But need Clarity and Consistency of messages
EST: Main Solar PV web page EST: Home Energy Generation Selector
Potential costs & savings for Solar Electricity
An average system is 3 kWp and will cost Panel
around £10,000 (including VAT at 5%). Typical capital cost
before grants,
Most domestic PV systems cost around depending on size and
type of system
£8,000 - £16,000
£3,000 to £3,500 per kWp installed, installed.
though small systems cost Financial saving
(£/year)
£190
proportionately more. Costs vary Estimated payback 14 years
between installers, so it is important to Estimated CO2 saving
920kg CO2
get several quotes. (kgCO2/year)

19. New Strategies
• The FIT and the surge have opened the market
• The Challenge is to sustain growth:
– New market segments
– The financial case is still excellent
– Less reliance on FIT = less policy risk
– But less push from the tariff cuts
– Smarter installations to maximise the other income
– Focus on cities

20. Solar Future
The success of PV market development in the UK
Colin McNaught
26th June 2012