Solar power in the UK will thrive without subsidies by 2020 as plummeting hardware costs and a mature supply chain transform the British solar industry says a new report from Berlin-based think tank THEMA1.
Using evidence based on price signals and business activity in the German solar market, the report found all three technologies in British solar power – large-scale solar farms, commercial roof-top systems and residential solar panels – would be economic without government support in the next decade.
German utility giant E.ON last week announced that tumbling renewable electricity prices meant it was dropping the fossil fuel half of its business to focus on solar and wind. This move, the report claims, represents a monumental shift in the German energy market, and similar solar cost reductions would trigger the same changes in the UK.
The report predicts that in 2015, solar will outstrip oil and gas to become the leading source of new power generation globally in terms of annual installations. The rapid pace of innovation in PV technology has led to solar module costs falling by about 20 per cent for every doubling in installed capacity.
In Sight: Unsubsidised UK Solar (PDF), was released as Britain increasingly banks on wind and nuclear power for its clean energy quota, forcing solar to the fringes of the funding pool. This is despite solar PV technology having the fastest installation rate in the UK – an average of 1.1 years to generate its first electricity from initial planning application, compared with 5.4 years for offshore wind and 12 years for nuclear energy.
“We are firmly convinced that solar will become the bedrock of the global power system going forward,” said report author Gerard Reid. “That said the road … is unchartered and difficult. Our message to the UK government is to reduce support for solar but do so gradually.”
The report recommends UK policymakers:
- Reduce the impact of solar support on domestic power prices by shifting some price-based support to low-interest credit, and grants for domestic battery packs which boost the value of unsubsidised residential systems.
- Support measures to optimise the grid integration of renewables, including smart meters and an increasingly computerised grid which uses digital technologies for a faster, deeper, more responsive network.
- Steadily reducing solar support. For example using grants for residential solar batteries, and low-interest credit via the Green Investment Bank, which has not yet invested in solar power systems.
