Wednesday, Feb 8, 2023
International Finance
Energy Featured

Solar Power: A beacon of hope amidst rising energy costs in UK

IFM_UK Solar energy-image
About 1.9 million households plan to install solar panels or similar renewables this year.

Steve Springett, director of renewable energy firm Egg, was optimistic about the trajectory of the solar market. He says that the recent boom is because of two factors – people are beginning to appreciate the environment better, and conventional energy has become unaffordable.

The UK government reduced the VAT on solar power from 5% to nil this spring and made solar panel installations more promising. On eBay, searches for solar panels and batteries touched 54% and 134% in June, compared to the same period in 2021. Consumers are also eyeing smart meters to regulate their energy use.

The recent surge is among many booms and busts in the industry, which people call the “solar coaster” because of its unpredictability. Much of this volatility is reactionary to the government’s “feed-in-tariffs” policy, which incentivized households by paying them for solar energy generation.

According to data from consumer credit reporting company Experian, about 1.9 million households’ plans to install solar panels or similar renewables this year.

Springett added that the heavy energy bill due to the Ukrainian war and supply chain disruptions would reduce the time to recoup an installed system’s cost, from 10+ years to around seven. Panels can last 40 years and usually have a 25-year warranty. They cost about £5000-£15000 to install and may take up to three months to connect to the grid.

The solar panel demand rise has also shed light on sourcing issues. The supply chain disruptions due to the pandemic have increased freight rates and led to a scarcity in inverters, which convert DC from panels to AC used in homes.

Conservative MP Nus Ghani, in a debate at the British Parliament last week, pointed out that most panel production happened in Xinjiang. The Chinese province meets 45% of the world’s polysilicon demand – a key component for panel production.

Britain is trying to minimize its overdependence on Chinese panels and triple its solar power capacity by 2030.

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