Renewable Energy - Solar Thermal and Photovoltaics Market Report - UK 2011-2015 Analysis

Countries covered: United Kingdom AMA Research are pleased to announce the publication of Renewable Energy-Solar Thermal and Photovoltaics Market Report - UK 2011-2020 Analysis. Since the introduction of Feed in Tariffs, the UK market for Solar Thermal and PV systems has expanded rapidly, with 2011 experiencing exponential growth and resulting in changes to tariff support levels. The report contains:- MARKET OVERVIEW - market size for solar thermal and PV systems, review of key market influences and analysis of current developments. KEY MARKET DRIVERS & BARRIERS TO GROWTH. REVIEW OF SUPPLY AND DISTRIBUTION STRUCTURE. FORECASTS FOR MARKET DEVELOPMENTS UP TO 2020 - volumes/product and sector mix. Solar thermal and PV systems are a well accepted technology in many European countries, but overall volume demand is still relatively low in the UK - though has grown strongly in 2010/11. Leading players are a mix of specialists in solar systems, or parts of major groups involved in the heating industry. In the medium term, capacity will need to increase - not only in terms of production, but also in terms of installation capability to meet demand projections, though 2010/11 has seen the emergence of many new entrants into the sector. Areas of particular interest include:- UK market development compared with activity in key European markets. Impact of FIT’s (Feed in Tariffs) on demand for Solar PV in particular - exponential growth in 2011 Other Government incentives to stimulate developments in the renewable energy sector. Overview of market drivers and barriers to growth in UK - key opportunities and constraints. Emergence of new entrants and routes to market in 2010/11 Residential sector overview - new build, self build, etc. Market forecasts up to 2020 - volumes, key sectors, tariff changes etc. Key areas of coverage in the report include:- KEY MARKET INFLUENCES Housing market structure, UK dwelling stock, housing stock mix by age (2007/2050). Growth in proportion of owner-occupied housing. Government Incentives - Low Carbon Buildings Programme (LCBP). Renewable Heat Incentive (RHI) scheme, Feed-In-Tariffs (FIT’s), PAYS (Pay As You Save), Green Deal, Code for Sustainable Homes etc. Changes to FIT’s in 2011. Provision of financial support - changes in government policy. CLIMATE CHANGE ISSUES Strategies to combat climate change: the EU Renewable Energy Directive, the UK Renewable Energy Strategy, Code for Sustainable Homes, Warmer Homes Standard. Establishment of Renewable Energy Deployment programme. Overview of Renewable Energy market in UK - alternative options - other microgeneration technologies. SOLAR THERMAL AND PV MARKET UK Solar Thermal and PV overview - product definitions, overview of market - by area and number of installations, values 2007-10. Flat plate /vacuum tube - share by product - performance, key drivers etc. European market overview - market size for Solar Thermal Collector Plates and Solar PV by volume 2007 -2010 in key EU markets, share by major country (comparisons of take-ups, reasons for success in Germany, Austria, Spain, Italy etc). European and UK growth rates. UK Solar Thermal and PV market review - background to recent growth in demand - market size by unit sales and value 2007-10, performance in 2011, mix by solar thermal and PV, mix by UK region and reasons for variation. Review of key market drivers, impact of RHI / Feed in Tariffs, PAYS schemes etc, competition from other renewables. Analysis of UK by sector - residential, industrial/ commercial/ public sectors - share by sector 2010 - recent trends, future projections, key drivers in each sector, review of self build market, gas / off-gas areas. Barriers to growth - supply chain issues, payback periods, installation, new build/replacement, performance, consumer awareness, etc. Forecasts up to 2020 - alternative views, volume projections for 2010-2020, range of key influencing factors. Forecasts of growth rates vary considerably dependent on key issues. SUPPLY AND DISTRIBUTION STRUCTURE Key players - suppliers, manufactures, installers - market fragmentation. UK distribution structure - key routes to market - changes in supply and distribution. New entrants - market opportunities.

Additional Information

Solar Photovoltaics (PV) is considered to be a market with significant potential in the UK because there are very few planning issues and, if costs were reduced, almost 4% of UK electricity could be supplied using this technology - in addition carbon emissions could be reduced by 3%. However, if Photovoltaics is to become a commercially viable product, significant government support and incentives will be required, combined with major cost reductions to improve investment paybacks. The Feed-in Tariff scheme was introduced by the Government in 2010 and has had a major positive effect on the sector during its first 18 months to September 2011.

Our estimates indicate that in 2009 there were annual sales of around 6,000 - 7,000 photovoltaic units and around 24,000 solar thermal units into residential, commercial and industrial applications. Solar thermal is dominant, reflecting lower costs and wider usage in domestic properties, compared with much higher investment costs in PV installations - though the balance is changing rapidly in 2011.

Feed-In Tariffs (FIT's) became effective from April 2010, as a means of increasing the market value of both renewable electricity and renewable heat. As a result of these changes, the marketing efforts by a wide range of companies have been significant in promoting the benefits of all renewable technologies, with solar well placed to provide solutions in both residential and non-residential applications.

At the time of report publication, DECC has announced a virtual 50% reduction in tariffs to take effect from 12th December 2011. While some reduction has been anticipated, the scale and speed of the change has caused widespread concern in the sector that the development of the industry will be significantly impacted. The changes are subject to discussion with consultation due to close by December 23rd .

According to Ofgem, in the first twelve months of the Feed-in Tariff scheme (April 2010- March 2011) more than 30,000 renewable installations were registered with FIT Licensees. In the fourth quarter of FIT Year 1 alone (January-March 2011), 11,824 FIT installations were registered, which represents a 30% increase in the number of installations registered in just the third quarter. Renewable installations include Hydro, Photovoltaics, Wind, Micro CHP and Anaerobic Digestion, but by far the largest share of total installations in 2010/11 was taken by Photovoltaics at around 94%.

Given that the annual sales of PV in 2009 were around 6,500 units, the Feed-in Tariff scheme has certainly made a significant impact in its first year with sales increasing rapidly to over 25,000 installations in the first half of 2011 - with provisional estimates of around 34,000 installations in the July-September 2011 quarter.

In terms of future prospects, the changes to tariff levels have thrown any market projections into turmoil. A wide range of scenarios have been highlighted already and our forecasts are assuming a significant reduction in 2012, though medium term growth projections are still high to meet targets in the UK. Current Government forecasts are to achieve around 800,000 installations by 2020, which would represent a major growth on 2009 levels but given performance in 2010/11 it is clear the impact of the recent FIT scheme indicates the potential for strong growth exists in the UK - if the subsidies are sustained at an ‘attractive level’ .

In contrast to Solar PV, solar thermal has seen some significant decline in the majority of European countries in the last 2 years although in the UK there has been growth in both 2009 (10%) and in 2010 (18%). The government's aim is that the recent introduction of the Renewable Heat Incentive will help drive a significant increase in the level of renewable heat and that by 2020, 12% of heating will be generated from renewable sources, saving up to 44 million tonnes of carbon (MtCO2) by 2020. Market growth for solar, therefore, will be heavily dependent on a combination of installation costs and grants and subsidies to encourage significant market acceptance, with many industry participants encouraged by recent interest levels. However, the recent proposed changes have severely dented market optimism and it is difficult to assess the full impact, at least in the short term, if the changes are fully implemented.

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