UK investment in solar will safeguard against the rising cost of power

by James Martin II on January 8, 2013

The cost of electricity has been rising throughout the UK, driving many to look into ways to cut power bills. In addition to investing in energy efficiency measures, an increasing number of homes and businesses are also opting to install solar PV systems to reduce their costs. Energy market analysts GlobalData are now saying that those who aren’t able to make an investment in solar in the UK could face spiraling electricity costs, with a larger portion of the population than ever before to suffer from ‘energy poverty’.

Power bills have been increasing for a number of reasons, including the government-backed push to increase the proportion of the UK’s energy generated by renewable energy sources and the rising cost of natural gas, one of the main fuels in the UK’s energy mix and one that is expected to be increasingly important into the future. GlobalData expects UK gas prices to unstable in the year 2013 due to its being just one player in the local gas market, which spans the European Union. On the other hand, the cost of solar power and other renewable has been steadily falling, and are expected to be cost-competitive with conventional power generation technology by the end of the decade.

Although playing a part in driving up power prices in the short- to medium-term, adopting more renewable energy technology such as solar power and wind is seen as one of the key ways that the UK can limit the severity of the price increases, mainly due to the expected future price volatility of natural gas.

GlobalData’s stark warning–that those who can afford it to invest in solar will face huge power bills in coming years–comes from an investment viewpoint and therefore does not prescribe what the government or utilities should do to alleviate the problem for lower income households. “Renewable subsidies represent a cost and an opportunity for domestic energy consumers. Those that can fund the installation of solar PV, or borrow the money to do so, should invest. Those that can’t will have to pay,” says Jonathan Lane, a consultant for GlobalData. He notes, however, that the affordability of power for lower income households is likely to become an issue that will need dealing with as time goes on, potentially requiring ‘radical’ decisions by policy makers to alleviate the pressure.

This could include government intervention into to the core business model of energy utilities; as it stands, it is in utilities’ interest to encourage electricity customers to use (and pay for) more electricity. In fact, energy efficiency is counterproductive for utilities under the status quo. Lane says, “Utilities will also be in the firing line as consumers smell profiteering at their expense. They will need to consider how to make money out of energy efficiency rather than selling kWh’s, and will need to do this more quickly than they might have anticipated.”

Thinking of going solar to save money on your power bills? Request a free comparison of solar quotes by filling out the form to the right of this page or contact our team:

sales@solarselections.co.uk

Phone: 020 7205 2267

© 2013 Solar Selections Ltd

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