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Looking Beyond FiTs Towards a Brighter Future

Feature by Paul Leadley

Feature by Paul Leadley


LOOKING BEYOND FiTs TOWARDS A BRIGHTER FUTURE - Published RCI, September 2011

The recent cut in Feed-in Tariffs has caused concern about the immediate
future of the photovoltaic energy market. In this article, Paul Leadley, Special
Projects Manager at Langley Waterproofing Systems Ltd, argues that the market
still has a very bright future and that contractors should pursue the MCS
accreditation that will enable them to benefit from it.

When the Department for Energy and Climate Change (DECC) introduced its generous Feed-in Tariffs (FiTs) for energy produced by alternative means they were viewed as a potential revenue stream by many businesses. This caused a surge in roofing contractors applying to achieve Microgeneration Certification Scheme (MCS) accreditation – the credential they needed in order to install PVs and tap into this new market.

However, the Government’s recent fast-track review into FiTs has cast a shadow of uncertainty over the long-term outlook for PV energy. With larger commercial and public sector projects facing FiTs reductions of up to 70%, some might even argue that the large-scale market is on the verge of a ‘PV recession’. The result is that MCS accreditation has started to look far less attractive to many contractors, especially given the costs involved in achieving it.

Despite this apparently gloomy outlook, I believe that there is a still a very bright future for the PV market and the contractors involved. The key is to remain focused on the bigger picture. If we look beyond this short-term FiTs setback, the future still promises to bring significant opportunities for those contractors who are MCS accredited.
In my view, much of this potential will be driven by the cost factors involved. Earlier this year, the UK’s biggest energy suppliers announced yet another round of price increases and it’s been estimated that an average 20% inflation rate in energy costs could eventually result in consumers spending as much as £1.00 per unit of electricity in 25 years time.

This scenario will undoubtedly cause business consumers to seek ways to reduce their energy bills, thus opening the door for roof top mounted PV solutions. An increasing number of businesses are now starting to think about the bigger energy cost picture and many of them are now asking not What’s in it for me?’, but ‘How can I free myself from the national grid?’ The symbiotic relationship between consumers looking for energy alternatives and PV will surely help seize on this situation and I believe this is a major factor that will drive the industry forward.

In addition, the economics involved provide another compelling reason why the PV market will grow in future, and why contractors should already be making plans to become involved. The costs of PV installation have already fallen by 30% since 2006 and the Solar Trade Association (STA) estimates that they will continue to fall by another 13%-17% per year due to efficiencies in the manufacturing process. This will lead to rising confidence among customers, investors and within the wider industry.

We should remember also that the DECC is only restricting subsidies given to installations which have a capacity greater than 50kWp, which essentially means projects with over 250 PV modules. One of the reasons for this move is to protect the money available for medium (and smaller) scale projects ideal for roof mounted systems. These medium sized projects certainly represent great opportunities for contractors to tap into significant revenue streams, provided they are properly equipped to tackle them.

Some recent industry commentators have suggested that the future for those working within the industry looks bleak, with the decision to reduce FiTs likely to jeopardise thousands of jobs. These comments stem primarily from the fact that historically, no energy supply industry has ever flourished in the long-term without some sort of government support. This alone is the source for considerable caution amongst contractors considering the idea of MCS accreditation.

However this is countered by other estimates from the STA that suggest that the UK could be set to benefit from a substantial green-collar job market, with 140,000 people becoming employed in solar energy by 2015. This suggests that the UK is potentially on the edge of a huge increase in PV sales, which will dramatically increase the need for contractors to become MCS accredited. As more contractors get involved in installing PVs across the UK, competition will stiffen and only those who have prepared properly will survive.

So while access to one opportunity is about to be restricted, it’s important for us to remember that other opportunities remain wide open. PV is still big business in the UK and many people are convinced that it will remain so for many years. The initial rush may be tempered as a result of reduced FiTs in the short-term, but I believe that it’s naive to think the industry is in danger of stalling.

By restricting subsidies to installations above 50kWp, this Government may indeed have temporarily thrown the growth of the PV market off-balance. However when we look beyond FiTs, into the bigger picture, the advantages of solar energy are more than enough to drive the industry forward and deliver long-term benefits to those contractors who are properly prepared.
 

 

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