Solar power in the UK could be cost competitive within decade

Solar power could be cost competitive and thrive in the UK without subsidy from 2017 onwards, according a report from consultants Ernst & Young.

The UK Solar PV Industry Outlook Report on the non-domestic 50 kW to 5 MW market says that the costs of photovoltaic panels have already fallen significantly since 2009 and could have halved by 2013.

In fact, according to manufacturer Applied Materials’ third annual solar energy survey, the cost of photovoltaic panels now stands at an even lower value of $1.25/W and is expected to reach $1/W in the next couple of years.

According to Ernst & Young’s analysis, while solar power is only currently economically viable in the UK with feed-in tariffs (FITs), falling photovoltaic costs and rising fossil fuel prices could make large-scale installations cost-competitive within ten years.

But the solar industry is still reeling from the Coalition Government’s decision to cut FITs for large-scale solar installations by 40-70%.

The report argues, however, that setting slightly higher FITs for large installations, of 20-24p/kWh, would generate a sufficient rate of return for developers to attract investment for solar farms and community projects without denuding the scheme of funds for smaller domestic installations.

Ernst & Young warn that the current level of FITs and support available to solar developments under the Renewables Obligation is insufficient to maintain the industry in the UK.

The report was commissioned by the Solar Trade Association (STA), which is calling on the Government to rethink its solar power strategy.

For further information:

Related stories:
UK Government confirms deep cuts to large-scale solar feed-in tariffs (9-Jun)
UK Government needs to rethink solar policy, says report (6-Jun)

21 June 2011