UK becomes world's fastest-growing solar market

13 August 2010

The sun is rising on the UK's solar market in 2010, as attractive government incentives make it the world's fastest-growing country for photovoltaic (PV) installations this year, according to iSuppli.

Installations of PV systems in the United Kingdom will amount to 96 Megawatts (MW) in 2010, up an astounding 1500% from 6 MW in 2009. While the country's growth will start from a nearly negligible level in 2009, the expansion will dramatically outpace the growth of the next fastest-growing nation, Spain, which will rise by approximately 730% in 2010.

"When you think of weather in the United Kingdom, London fog comes to mind more readily than bright sunshine," said Dr. Henning Wicht, Senior Director and Principal Analyst for iSuppli. "However, things definitely are looking brighter for the solar market in the United Kingdom in 2010, as the country has adopted attractive Feed-in-Tariffs (FIT) to promote PV adoption. Furthermore, with leading solar country Germany cutting its FITs, the focus of the PV world is shifting to places with more favorable incentives-making the United Kingdom a solar hotspot this year."

While growth in the UK is expected to slow down from such a blistering rate after 2010, PV installations will continue to rise in the 50% range for each year until 2014.

Keeping FIT
FITs promote the use of solar energy by guaranteeing that utility companies will buy excess electricity produced by solar installations. This helps individuals or organisations to defray the upfront costs of investing in a PV system.

Extensive use of FITs has helped Germany to become the world's leading country for PV, with 3.8 Gigawatts (GW) worth of installations in 2009. However, Germany government's move to reduce FITs will cool off growth in the country from 2012.

The overall goal of the United Kingdom's programme is to encourage smaller, distributed, self-generation in an effort to reduce CO2 emissions and to contribute to the renewing of the UK energy park. The United Kingdom is using above-market FIT rates to incentivise PV adoption.

The average residential price for electricity in the United Kingdom is currently £0.12 per kilowatt hour (kWh). A residential PV system of up to 4 Kilowatts (KW) in size can earn £0.36 for every generated kWh that is consumed by the owner itself, or £0.39 for every kWh fed into the grid. This translates into a financial benefit of £0.48 per kWh for self-consumption.

According to the United Kingdom's Department of Energy and Climate Change, a typical household that installs a well-positioned 2.5 Kilowatt (KW) system could save £140 per year on its electricity bill. Installations conducted since July 2009 can retroactively qualify for the tariff. Returns on Investment (ROIs) for advantageous residential projects can approach 12%, according to iSuppli. Their initial estimate is that the UK PV installation market will reach 214 MW in 2012 and 501 MW in 2014. This assumption is modelled on the ramp rates of other countries and by accounting for the UK's amount of sunlight received.

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