The dramatic cut to Feed-in Tariffs (FiTs) by up to 87% from January 2016, recently proposed in a government consultation, sent shockwaves through the UK solar industry.
How can it possibly survive such a decision? Well, it can and it will, but it will need a different business model, positive messages to consumers and a better understanding of the benefits associated with installing solar energy on buildings, regardless of the FiT.
The proposals are already affecting the industry, with several local authorities announcing cuts to their solar installation programmes and predictions that this could cause a reduction in the UK’s renewable generation capacity by 6GW by 2020/2021; it is also likely to result in a significant number of job losses.
But we do have some control: we are presented with an ideal opportunity now to prevent the drop in FiTs from meaning the end of the UK solar industry. FiTs were never meant to last forever and have served their original purpose in raising awareness, increasing uptake of photovoltaics (PV), growing the UK economy and driving down the cost of PV. The impact on businesses is down to the way FiTs have been reduced – not gradually to allow them to adopt new models, but dramatically, in a short time period.
Hence the impact has been a massive uptake in PV before the end of the year, putting huge strain on businesses, to be followed by a significantly reduced uptake in January, which many won’t survive. The industry would stand a much better chance if the drop had been more gradual.
So, a swift campaign of awareness-raising is now needed to highlight to consumers the many positive reasons to install PV, such as savings on electricity bills, payments for exporting electricity to the grid (export tariff is not yet affected) and the security of supply benefits, as well as the wider environmental pay-off. There is a common misperception that FiTs are the main benefit to installing PV, but they are only part of the picture.
The reduction in FiTs paves the way for new business models and opportunities, enabling sensible decisions to be made on technology choices and the optimisation of self-consumption – such as the Buildings as Power Stations concept that SPECIFIC Innovation and Knowledge Centre at Swansea University has pursued since it was set up four years ago – where the vision of buildings that generate, store and release their own energy, allowing building owners to manage their energy, with a security of supply and significantly reduced energy costs, can now be realised.
And for the government and distribution network operators, battery storage technologies could alleviate the cost of upgrading the existing electricity grid network, which will be necessary if we continue to generate energy from renewable sources without the help of storage. Diverting spending to storage instead costs less in terms of both capital costs and costs incurred from the disruption of vast infrastructure works, which will surely win more political favour.
Could the government also perhaps consider awarding grants for energy storage, as has been done in Germany since 2013? The cost of solar energy in Germany has now fallen so significantly that mains electricity costs twice as much as solar power, and batteries are used to secure against rising electricity prices, as well as relieving grid stress during peak feed-in periods by exporting electricity into the grid at optimum times.
While batteries are still relatively expensive in the UK, the drop in FiTs could help force technology to improve and drive prices down, as FiTs have done for solar energy. However, we need to act quickly if we are to prevent the decline in installers, projects in development and planned investment in training.
If the drop in FiTs could be combined with the introduction of grants for energy storage, the impact on UK businesses will be far less than without encouraging storage. Some take the view that FiTs have stifled the storage industry, so this hiatus could be a chance for it to catch up.
Is there life after FiTs? Yes, of course there is, but also a stronger case for storage of energy both for use at the point of source and for better grid management at a UK scale.
Joanna Morgan is an architect and building integration manager at SPECIFIC, an industry-academic collaboration at Swansea University