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British Subsidies Trigger 'Solar Revolution' Under Rainy Skies
2010-08-04 23:00:00.0 GMT
By Alex Morales
Aug. 5 (Bloomberg) -- The U.K., known for rain and gray
skies, enjoyed record installations of solar panels in July
after the government guaranteed prices for electricity from
renewable energy up to 10 times market rates.
Photovoltaic panels with the capacity to generate 4.6
megawatts were fitted last month, energy regulator Ofgem said on
its website. That's more than in the whole of 2009, according to
Bloomberg New Energy Finance, which forecasts the nation's solar
market will increase 12-fold this year.
The government on April 1 introduced feed-in tariffs that
fix above-normal prices for electricity from small installations
of wind, solar and hydro power. Companies from the German
utility E.ON AG to Tesco Plc, the biggest U.K. supermarket, have
entered the market. Sharp Corp. is doubling production at its
solar cell factory in Wales, which is the biggest in Britain.
"The solar revolution is coming," said Serge Younes of
the industry consultant WSP Environment & Energy. "There are a
lot of roofs in the south of the U.K. and a lot of land."
According to Ofgem, 11.3 megawatts of PV were fitted in the
first four months of the tariffs' existence, enough to supply
26,000 homes. That tops the 4 megawatts installed in 2009 and
4.4 megawatts in 2008.
It isn't just homeowners who are taking advantage of the
incentives. As well as selling panels, J Sainsbury Plc, another
supermarket chain, may fit panels to its stores. Farmers
including Glastonbury music festival founder Michael Eavis are
seeking income from placing solar power in fields and on barns.
Tiny Industry
The industry is starting from a low base. According to
global accountancy firm PricewaterhouseCoopers, solar PV
represents 0.3 percent of U.K. renewable energy. Total capacity,
at 32 megawatts in 2009, ranks Europe's third-biggest economy at
number 11th out of the 27 European Union member states.
"A lot of what is happening is still a cottage industry,"
PWC Renewables Director Daniel Guttman said in an interview.
Germany and Spain, which have both had feed-in tariffs for
several years and are now trimming them, had installed PV
capacity 300 times and 100 times greater respectively than the
U.K. in 2009, said PWC.
Sharp's panel plant in Wales will double annual production
to 500 megawatts by February, said Andrew Lee, head of the
Osaka-based electronics maker's U.K. solar unit. Hundreds of
jobs will be created, he said. Sales in Britain now account for
10 percent production, a tenfold rise on 2009.
'Dramatically' Changed
"Before the FITs came in, 99 percent of our sales were for
export," Lee said in an interview. "This is starting to change
dramatically."
The tariffs are guaranteed for 25 years and vary according
to capacity and whether panels are fitted to old buildings new
ones. They're as high as 41.3 pence per kilowatt-hour produced,
about 10 times the current day-ahead U.K. power price.
One challenge is overcoming the misconception that Britain
isn't sunny enough, said Derry Newman, chief executive officer
of Solar Century Holdings Ltd., which builds solar systems for
Tesco, Sainsbury's and homebuilders Persimmon Plc and Barratt
Developments Plc.
"It's the number one myth that we always try to dispel,"
Newman said in a telephone interview in London. "The U.K. is
fantastic for growing plants. Plants just need light, heat and
water. Solar PV just needs the light."
Of 20 nations surveyed by the European Photovoltaic
Industry Association, Britain had the fourth-most gloomy skies,
sunnier than only Sweden, Norway and Finland. Average solar
irradiation is about 6 percent lower than in Germany, the
biggest PV market.
Doubling Work
Newman said Solar Century's work in the U.K. has doubled
since April. It's working with General Electric Co.'s GE Capital
unit to bring solar cells to schools, targeting 60 projects this
year, he said. GE will pay the cost of installing panels, and
the schools will make repayments over 15 years from income
earned on the tariffs. Because the rates pay out for 25 years,
the schools enjoy the full impact of the payments for a decade.
Farmers see solar power as a new source of revenue. Worthy
Farm, which hosts the Glastonbury Festival, plans to mount 1,200
panels on barns, according to its website.
The National Farmers Union has had a "significant number"
of inquiries from financiers and its members about using
farmland and barn roofs to host panels, said Jonathan Scurlock,
the union's chief renewable adviser.
Farmers are being offered rent of 1,000 pounds to 2,000
pounds per hectare for their fields, more than they can make
from livestock or crops, he said.
"We don't want a food-versus-fuel backlash," Scurlock
said. "We're looking at things like solar panels mounted to a
2-meter (6-feet) height with free range poultry running around
underneath."
Supermarket Roofs
The U.K.'s four largest supermarket chains, Tesco,
Sainsbury's, WM Morrison Supermarkets Plc and Wal-Mart Stores
Inc.'s Asda unit all are considering whether to install the
panels, said Younes, the WSP consultant. Sainsbury's is
examining all options, said Jack Cunningham, the retailer's
environmental affairs manager.
"We can directly invest in that technology for our own
purposes," Cunningham said in a telephone interview. "Or we
can even look at renting out roof space and allowing generators
to put their PV on our roof."
Sainsbury, working with Electricite de France SA, Europe's
biggest power generator, has been selling Kyocera Corp. panels
since January. Tesco, which declined to comment, is also selling
PV panels. So is E.ON, Germany's biggest utility, which on April
6 announced a "solar saver" plan.
"The U.K. solar sector should boom as a result of these
tariffs," said Jenny Chase, lead solar analyst at New Energy
Finance. "The economics for every sort of PV system are better
than most other investment opportunities of comparable risk to
consumers."
For Related News and Information:
Climate-change news: NI CLIMATE <GO>
Top environment stories: GREEN <GO>
Most-read environmental news: MNI ENV <GO>
Renewable Energy Stories: NI ALTNRG <GO>
--Editors: Reed Landberg, Randall Hackley
To contact the reporter on this story:
Alex Morales in London at +44-20-7330-7718 or
amorales2@bloomberg.net.
To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or landberg@bloomberg.net.
