your power future of renewables low carbon south west bristol & bath science park 220415
TRANSCRIPT
The Importance of Solar
PowerWhy is this so important?
• The sun isn’t – as far as we know – going anywhere. Solar PV prices have dropped hugely in a
very short time, and more reductions are forecast. In 2005 I installed a system for a school at a
cost of £37,000, the same would now be £6,500.
• At a basic level this is really sensible, low pollution energy generation technology that we can
have on our own homes and businesses – it represents a huge step towards democratised
energy
The Importance of Solar
PowerWhy is this so important: 2/.
• February 2015, The IEA said “Solar energy will be the largest global energy source by 2050”
• September 2014, German Thinktank, Agora Energiewende “Solar PV will provide the cheapest
electricity of any source within 10 years”
• Elon Musk, owner of Tesla Motors, Space X and founder of Paypal also owns the largest solar
installer in the USA (Solar City), and sees solar as THE future energy source above all others.
• January 2015, Financial Times “Why solar is the future”
• May 2014, The Economist “The Future of Solar is very bright indeed, is more efficient when used
locally and financial models are more innovative than ever before”
The Importance of Solar
Power
A crucial technology that has fully matured.
• Increasing deployment in UK – we are now consistently amongst the top 10 global markets for solar
0
1000
2000
3000
4000
5000
6000
2008 2009 2010 2011 2012 2013 2014
Cumulative Installed PV Capacity (MW)
Cumulative Installed PV Capacity (MW)
• As of January 2015,
5.4GW of solar is
now deployed in
646,000
installations.
The Importance of Solar
PowerA crucial technology that has fully matured:
2/.
• The UK has a good solar climate – the technology
only requires light, not necessarily direct sunlight
• There are 250,000 hectares of viable commercial
rooftops alone in the UK, a huge and virtually
untapped resource of energy generation, but also a
great opportunity for owners and occupiers to
reduce their energy bills.
Solar PV demand vs
opportunity
The installation market.
• Growth in installers:
• Up until 2010 there were very few, probably under 30 installers across the UK – in fact we
almost universally knew each other
• In 2010, with the introduction of the feed in tariff, this grew, peaking with 4834 installers in
October 2012.
• Since then we have now stabilised at around 2700 nationwide, but there remains some
consolidation to be seen yet.
Solar PV demand vs
opportunity
• Domestic is still a huge market to be unlocked – there are new financial models coming
on stream the entire time, meaning that people don’t have to buy the system outright if
they don’t have the capital to spend.
• “Free Solar” is still operating, but its days are numbered as the tariffs reduce and
investors see better or less risky opportunities elsewhere.
• Most new finance schemes will follow one of two routes: lease purchase, whereby
cheap finance is obtained from a bank or other provider, and the cost of monthly
repayments is covered by the feed in tariff and increasingly, bill savings.
Future markets.
Solar PV demand vs
opportunity
• Secondly, the domestic Power Purchase Agreement market may now be taking off in the
UK. This is the natural successor to Free Solar and hugely successful in the USA
• The home owner leases their roof to the system owner
• The home owner gets discounted electricity from the array for 20 years, making a
saving of 15% per year or over on their bills.
• No capital outlay. No risk. No complicated free solar sales clauses or mortgage
issues.
Future markets: 2/.
Solar PV demand vs
opportunity
• The UK large ground mounted array market is currently booming but the UK
Government is putting huge emphasis on the rooftop commercial market.
• The large scale commercial rooftop market is already starting to get busy and looks
forecast to continue through to 2020 and beyond.
• There are a growing number of financial models here too.
• The community energy sector - community ownership of local energy generation – has
also seen rapid growth and we expect this to increase in the coming months and years,
with ground-mounts, commercial rooftops and aggregated domestic roofs involved.
Future markets: 3/.
Future Trends
Future Markets 4/.
• BIPV and others
Building – and infrastructure – integrated solar is also a growth market.
We have some indication that there will be a “window” on Feed in Tariff reductions for
building-integrated solar, to allow the market a break to mature and become more cost-
competitive with bolt-on solar.
Future Trends
Future Markets 5/.
• There are other drivers coming that include cheaper technology per wp installed, but the main driver in the UK market in the next 24 months will be increasing energy self-use via storage technologies, and the UK Government is now backing these with funding incentives
• It is likely – elections dependent – that we will see a continuing reduction in feed in tariffs, and the solar industry should (and is) planning for life beyond subsidy.
• Grid parity is already achieved in some circumstances and we now look to reduce costs wherever we can in the supply chain to help this happen.
• Module prices are likely to fall by up to 20% in December 2015 when the EU Anti-dumping MIP restriction is removed on Chinese module manufacturers. EU module manufacturers may suffer from this.
What is driving the
market?
Standard ROI
Breakdown
Feed in Tariff
Export
Energy Savings
Feed in Tariff – paying for every unit of
electricity produced, whether used on site
or not. Index linked to RPI
Export – paying for every unit of electricity
exported to the grid.
Energy Savings – savings from not buying
electricity via the national grid. This
increases year on year as unit price goes up.
What is driving the
market?From eco-bling to a proven demand reduction tool
• That model is changing gradually, with energy savings becoming an ever more important
and greater part of the investment case.
• Even though we are seeing short-term reductions in fossil fuel pricing, this is not
affecting the retail electricity price, which remains forecast to rise by at least 5% per
annum over the next 5 years, against an average 9% per annum rise for the last 5 years.
• Energy savings – especially via storage become ever more important in all sectors – I’ll
come to this in a moment
What is driving the
market?From eco-bling to a proven demand reduction tool
: 2/.
• In commercial and industrial settings, solar is becoming really well accepted as an easy
way to drive down energy costs without necessarily needing to spend anything upfront
– again, lots of innovation is happening in the financing of solar PV
• For those who do want, or have the capital to invest, the returns are more compelling
than ever before – 15-20% [and more] per annum, index linked to RPI for 20 years. Point
me to a bank that can offer close to that?
• But these are the carrots – there are also some sticks:
What is driving the
market?From eco-bling to a proven demand reduction tool
: 3/.
• Energy Performance in Buildings Directive, means all rental buildings (commercial first,
then domestic) that are leased will need to reach an energy performance of E or above
by end 2018, or they cannot be let. Solar PV generally boosts the building energy grade
by one rating, so this can be a free way for a landlord to increase building efficiency.
• Energy Savings Opportunity Scheme (ESOS) – places a legal requirement on large (non-
SME) companies to audit their energy use each year, and PV can offset the cost of these
audits. – again, with no necessary upfront capital cost
1. Storage.
Without a doubt, the single largest future driver of PV uptake is the introduction of
storage that allows daytime generation to be used at night – more in just a second
Future Trends
What are the future drivers?
Future Trends
Did I mention storage?
Battery storage is already
deployed
High hopes for flywheel storage
Computer graphics show future
Actually, it’s already here
100%
Solar PV. Nothing else.
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