DECC Reaffirms 22GWp Solar Power Target by 2020

by Jarrah Harburn on November 8, 2012

DECC reconfirms 22GWp solar target by 2020

The Department of Energy and Climate Change’s Minister Greg Barker has reaffirmed the ambitious targets of over 20GWp of solar panels to be installed in the UK by 2020. After a year that has seen this target introduced, several large solar feed-in tariff reductions and now reestablished, the news is welcomed cautiously by the industry.

One Gigawatt Installed of Solar Power and the 2020 Target is born

In February 2012 the DECC announced the newest wave of feed-in tariff reductions to maintain sustainable levels of deployment and keep in line with the ongoing price reductions. A few days later, it was established the the UK solar power industry had hit a milestone; 1 Gigawatt peak (GWp) of solar photovoltaic installed and registered. This was an amazing milestone for the UK solar power industry so early on its real deployment. Considering countries as sun drenched as Australia have only recently reached 2GWp after over four years of solar power incentives, it really displayed the fantastic uptake that solar panels have seen over the last 18 months.

The really exciting announcement from the DECC though was the fact that in their Draft Impact Assessment they were targeting 20GWp of installed capacity by 2020. Surely only a solid base of incentives and support for solar panels was going to be established to reach such a momentous target. No more sudden reductions and booms in installations followed by long months of inactivity, the solar industry thought. The security and future of thousands of jobs suddenly materialised and in the face of the feed-in tariff reductions hope started to spread.

Prices for components and installations continued to drop. They didn’t bottom out at levels that made the feed-in tariffs unattractive, they just kept going. This started to breed hope, the hope that perhaps the DECC knew what they were doing more than people had given them credit for. Maybe the best interests of the solar power industry were being taken to heart by the politicians, maybe there was indeed a future for photovoltaics in the UK’s energy mix. Maybe there was reason enough to plough on and trust to hope.

DECC May Announcement and Solar Target Reduction

Business slowed down after the March 3rd feed-in tariff reduction, but it was only in May that the foundation stones of this hope truly began to tremble. The DECC in it’s Official Impact Assessment examined the figures more closely  and adjusted its 20GWp target significantly downwards. By nearly 50%; 11.9GWp was the new forecast projection based on the installation trends it had reviewed. Turns out the draft impact assessment was built around a rushed assessment by market research firm Parsons Brinkerhoff (PB) who had claimed installation costs would drop by 10-30% by the end of 2012.

This was a gross overestimate according the DECC’s new analysis. If costs could drop significantly then the original 20GWP or now even 22GWp target could still be achieved, but it was dependent on the solar installation costs coming down considerably.

Solar Installation Cost Review

So how has this gone over the course of 2012? Well right now a 4kWp system costs £5,500 inc VAT at the lower end. At the start of the year the same size was around £9,000 inc VAT making the reduction close to 40%. Commercially and at the Megwatt (MW) level, installations cost close to £1 per watt including ground mounting. At the start of the year this was closer to £1.40 per watt, making that close to a 30% reduction.

The domestic feed-in tariff has been reduced from 43.3 pence per kilowatt hour (kWh) to 15.44 pence, which equates to a drop of around 65%. Despite this though, return on investment is roughly the same. In 6-7 years people will pay off the cost of the system, the only difference being that the demographic has shifted away from high income families with $9k to spend, towards middle pack incomes that are looking to save money on their energy bills.

Return of the 20GWp Target – 22GWp

In light of this and the new digression model for the solar feed-in tariffs things have stabilised. Installations of solar panels are being carried out for good, sustainable reasons once again; to save people money on their energy bills. Almost in parallel, Greg Barker has popped his head up again, on the first of November answering a question about whether the 22GWp solar target remains with “Absolutely! My ambition remains 22GW but we need further leap in cost reduction in whole supply chain to achieve it.” Good news then, so long as you maintain a surface level perspective.

That’s not something we’re very good at here at Solar Selections. Our article on the chances of another ‘leap’ in solar panels prices can be found here.

Written by Jarrah Harburn

jarrah@solarselections.co.uk

020 7205 2267

© 2012 Solar Selections Ltd

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