4kW solar systems and smaller proving most popular in UK market

by James Martin II on January 25, 2013

<4kWp solar systems dominate the UK market

Weekly figures detailing the number and size range of solar panel installations from the Department of Energy and Climate Change (DECC) paint a fascinatingly clear picture of where interest lies when it comes to installing a solar system. Systems whose rated capacity is 4 kilowatts-peak (kWp) or smaller dominate the UK solar market–out of the total 1,528 systems installed for the week ending 20 January 2013, 1,467 systems (around 96%) were in this range.

The discrepancy between number of small systems installed vs medium systems

One can theorise that small-scale solar systems between 1kWp and 4kWp in capacity are likely the most popular option for a couple of reasons. First of all, the feed-in tariff rates on offer for systems in this size range are the most generous on a per-kilowatt-hour (kWh) basis. The other reason is their growing affordability and relatively low up-front capital costs; a household or business can have a 4kWp solar system fully installed for around £5,240 or less at the time of writing.

In addition to the 1-4kWp range, the feed-in tariff has bands for 5 more size ranges (4-10kWp, 10-50kWp, 50-150kWp, 150-250kWp, and 250kWp-5MWp), plus a band for off-grid systems and a band for ‘new-build’ installations. The feed-in tariff rate under each band becomes progressively less as the size of the systems increase. The 4-10kWp and 10-50kWp bands are the second and third most commonly accessed after the 1-4kWp band.

However, the small difference in the feed-in tariff incentive between bands does not seem to account for the massive difference in the number of solar projects that apply under each. A mere 29 systems (about 1.8%) signed up the 4-10kWp band, and only 32 (about 2.1%) signed up under the 10-50kWp band.

It is unclear whether there is a psychological block for homes and businesses associated with the step-down in the tariff, or if the sudden drop in numbers between bands is due to the capital costs of installing larger systems. The cost per kWp of a fully-installed solar system tends to be lower as the system size increases–meaning more value per pound spent.

In terms of return on investment and payback periods, this means a general balancing out with the lower tariff rate: Thanks to how the feed-in tariff rates are distributed over size bandings, return on investment remains approximately the same for all systems in the 4kWp-200kWp range: around 10-15% or as much a 22% in the right conditions.

This leads one to search for answers as to why the 4-10kWp and 10-50kWp bands are so underutilised. In an interview with Solar Power Portal about the recent DECC figures, Managing Director of Southern Solar, Howard Johns, suggests that the problem may simply be a lack of awareness. “Potential customers are obviously not understanding the opportunity available for commercial roofs to use solar; there is work to be done by the industry to get the message out there,” he said. This would corroborate the findings of a survey conducted late in 2012 revealing that many individuals underestimate the potential returns available for those who install a solar PV system.

DECC figures telling a mostly positive story for the UK’s solar industry

Despite the less-than-stellar performance of the 4kWp+ solar system market, DECCs figures give some reason for the solar industry to be optimistic about the future. As Solar Power Portal points out, although installation numbers are nowhere near where they were during the earlier, less-stable days of the feed-in tariff, when impending cliff-steep drops in the rate drove households to sign up in droves, the number of systems installed on a weekly basis remains more or less stable–a ‘slow recovery’.

On top of this, keeping in mind the fact that it is the middle of winter at the moment–traditionally a slow season for solar power installations–as well as the fact that the medium- to long-term future looks bright for solar power in the UK, gives solar fans hope for an improvement later in the year, once the spring arrives.

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