UK solar: from gloom to boom

A grin breaks across the waiter’s face when he discovers he is speaking to the chief executive of Solarcentury.

He is delighted to discover that is the company building the iconic PV project across Blackfriars Bridge, spanning the River Thames below.

Working at the top of London’s towering Tate Modern art gallery, “people ask me about that project all the time”, the waiter informs Frans van den Heuvel. Then he pauses, lowers his voice. “So, what is it exactly, and how does it work?”

Two years ago, such an exchange would have been emblematic of Britain’s relationship with PV — with a public sceptical of the idea that solar energy had any place on their rain-lashed island, and a government asking questions not much more sophisticated than the waiter’s. Today things look starkly different.

Improbably, and in what feels like the blink of an eye, Britain has emerged as one of the hottest solar markets in Europe, with potentially huge consequences for the country’s tortuous energy transition.

Evidence of the boom is everywhere. International PV companies, from top-tier Chinese module suppliers such as Trina Solar to gold-standard German developers like Juwi, are pouring resources into the country.

Experienced European solar executives — in many cases fleeing stagnant markets back home — are starting UK businesses or taking the helm at existing ones. Even  the government, almost laughably clueless about the potential of PV a few years ago, seems to have got the message.

eden_prowebnew.jpg Eden project, cornwall
In 2010, the UK added 62MW of PV. Last year, it chalked up 965MW — almost as much as California (1.03GW). “Nearly 1GW of solar in a calendar year is twice as much as people were thinking at the start of 2012,” says Finlay Colville, vice-president at market researcher NPD Solarbuzz. “It’s a figure that was totally unheard of [with regard to the UK] a few years ago.”

Some experts forecast a 2GW market in 2013. To put that in context, the UK added about 1.8GW of wind — onshore and offshore — last year.

If the explosion of the UK market over the past two years caught the PV industry itself off guard, it knocked the government clean to the mat. For many years, the Department of Energy and Climate Change’s (Decc) stance on solar energy veered between the antagonistic and the oblivious.

In its “Renewables Roadmap” of July 2011 — a year in which Italy added 9.3GW of PV — Decc bizarrely failed to include PV as one of eight renewables technologies with significant potential to help the country reach its 2020 target. In contrast, wave and tidal, with less than 5MW in place in British waters even today, had its own chapter.

Yet to its credit, Decc quickly recognised the magnitude of its error. In an updated road map, published last December, it acknowledged that PV is by far the country’s fastest-growing source of renewable energy. More startlingly, it warmly embraced the notion that Britain could have 20GW of PV by 2020.

“I think we can have a little sympathy for them, given how quickly everything moved over the past two years,” says Robert Goss, UK manager for German PV group Conergy. “In particular, over the past six months, Decc’s engagement with the industry has been of a very high standard.”

Crazy as it would have seemed during the country’s feed-in tariff (FIT) chaos of 2011-12 — when Decc unsuccessfully attempted to retroactively rein in PV incentives — developers of large UK solar projects probably enjoy more clarity today than any other energy sector.

Like other renewables, the PV sector knows how many Renewables Obligation Certificates (ROCs) it is eligible to receive until spring 2017, when the government’s sweeping Electricity Market Reform package is due to enter force.

But given the speed with which multi-megawatt PV farms can go up in the UK — less than a year, from first engagement with landowners to commissioning — that time span offers the solar sector the equivalent of multiple project-development cycles, something the wind, gas and nuclear sectors can only dream of.

Developers of ground-mounted PV projects disagree on the impact of the UK’s planned ROC degression — going from two ROCs per MWh at the beginning of 2013, to 1.6 ROCs from 1 April, down to 1.2 ROCs by 2016-17.

But most, like Lightsource chief executive Nick Boyle, believe the market for large arrays will remain strong for the foreseeable future. At this point last year, Lightsource — the country’s largest generator of solar energy, with more than 200MW installed — was “questioning whether the UK would remain a viable market”, Boyle admits.

“Our impression now is that the UK is both a viable and a scaleable market for large-scale solar,” he says. “The changes in the government’s attitude in recent months have been massively positive.”

Encouraging noises from government are helpful, but far from the only thing fuelling the boom.

In a country where onshore wind projects often face vocal local opposition, solar arrays are relatively benign.

“By definition, a wind turbine needs to be exposed,” notes Boyle. “For solar, as long as the ground points up, it’s fine. Our highest installation is 2.8 metres off the ground. You can block that [from sight] with a big fence.”

In myriad ways, the UK benefits from having missed out on the wave of solar development that washed over much of continental Europe during the past decade — a wave now being rolled back in former hot spots such as Spain, Portugal and Italy.

The shrivelling of other European markets has left many engineering, procurement and construction firms hungry for work, hammering down installation costs across Britain. And thanks to countries like Germany, European investors have grown comfortable with PV as an asset class.

Stagnation in neighbouring markets means Britain is awash in experienced solar executives looking for greener pastures not too far from home. In some cases they are starting new businesses; in others they are shaking up existing ones, putting UK companies firmly on the global map.

Frans-van-den-Heuvelweb.jpg Solarcentury's Frans van den Heuvel Photo: Solarcentury
London-based Solarcentury — perhaps the UK’s best-known home-grown PV company — is one example. Van den Heuvel took the reins last year, having previously spent a decade as chief executive of Scheuten Solar, based in the Netherlands.

Founded in 1998, Solarcentury was long seen as a rooftop specialist, and its ambitions seemed to sputter during the FIT debacle a few years back. But in the past year it has diversified aggressively into developing and building ground-mounted arrays, and plans to bring 100MW on line in the last three quarters of 2013.

The company is now opening offices in South Africa and Panama, and is due for a jolt of publicity when the high-profile Blackfriars Bridge installation is finished this spring. “It really is Solarcentury 2.0,” claims van den Heuvel, left.

Yet for all the compelling reasons to be optimistic about solar energy in Britain, there are a number of forces lurking that could dent or even derail the sector’s momentum. Ironically, some of them are the same forces currently driving the market.

One such example is Britain’s geography. While its proximity to Europe is beneficial at present, the global solar industry ultimately views the EU as a market in decline or at least condemned to stagnation.

UK developers and politicians have grown accustomed to cheap Chinese modules pouring into the country via Europe, warns Ian Draisey, managing director of Dulas MHH, one of Britain’s largest PV distributors.

“Once other emerging markets around the world [such as South America] get going, product might not come here as freely as it has,” Draisey says. “It’s amazing how fast a boat can be diverted from one port to another if somebody’s offering a few more quid.”

In a similar vein, many in the industry worry that the UK government — having been caught flat-footed by plunging module prices a few years ago — naively assumes such dramatic declines will go on forever. Or worse, that it knows that such declines cannot continue, and is counting on that to curb development.

“We can do 1.6 ROCs,” says Nick Pascoe, managing director of Hampshire-based developer Orta Solar. “1.4 gets tight, and 1.2 gets very, very tight.”

The present weakness of the British pound — trading at multi-year lows against the dollar and euro — does not help in a country with almost no domestic PV manufacturing. A decision by the European Commission to impose tariffs on Chinese modules would be devastating to UK solar, although most developers speak hopefully of a “work-around”.

The planned ROC degression could be crippling as the grid fills up in sunny areas such as Cornwall and Devon in the southwest, forcing solar developers northward. Decc acknowledges the country’s grids, as they currently stand, will struggle to take anything more than 10GW or so of PV.

Another potential source of conflict are UK power utilities — none of which have yet shown much affinity for solar. “They are clearly going to be a major political hurdle in the future,” as they are currently showing themselves to be in Germany, predicts Jonathan Goose, UK director at Hanwha Q-Cells.

But the biggest wild card of all is the government’s obsessive zeal for offshore wind — a factor that may help or hinder solar in the years ahead. This affection in Whitehall has been met with almost universal disdain in the UK PV sector.

“I think Decc have their priorities completely wrong,” says Matthew Rhodes, managing director of Warwickshire-based micro-generation specialist Encraft. “For political reasons, [offshore wind] is all about deploying the oil and gas resource.”

Others, such as Ray Noble of Durham-based Solar BIPV, view the outsized role that offshore wind plays in the government’s future energy plans as an opening for solar developers.

He notes that this year offshore wind farms will receive 2 ROCs and large PV farms just 1.6 ROCs —“a price gap that would never have been dreamed of by the solar industry just a few years ago, or by government”. Effectively, that means that UK ratepayers will shell out 25% more for each MWh of power generated at offshore wind farms than solar arrays this year, and the spread is set to widen.

“It’s been a shock to the system,” Noble says. “My guess is there’s going to be a shortage of offshore wind in relation to government targets, and it will be a great opportunity for solar to make up the difference.”

Even the Crown Estate, which recently forecast 18GW of offshore wind in UK waters by 2020, acknowledges that the landscape has changed. In a world increasingly reliant on electricity, “the fact that some low-carbon sources [such as PV] have seen quite spectacular cost reductions in recent years is very good news,” says Huub den Rooijen, head of offshore wind at the Crown Estate, which owns and manages the UK seabed.

But den Rooijen emphasises the “complementary generation characteristics” of PV and offshore wind, arguing they will help balance each other out.

“I believe that complementarity is sufficiently large that they  will not be in direct competition for the next period of years,” he tells Recharge. “How things play out over the next 20 years, however, is an interesting question.”

Given the wild ride the British solar sector has been on over the past two years, the fact that it is still standing — let alone thriving — speaks volumes about its resiliency and even, perhaps, its inevitability.

Many growing pains lie ahead. But in all likelihood, PV will continue to surprise Britain for all the right reasons in the years ahead.