Business as usual?

View point: Rob Denman, TGC Renewables says the UK should be able to set its sights on grid parity

With the news that German solar panel manufacturer Q-Cells has filed for bankruptcy, it seems European solar manufacturers are in for tough times.. Rob Denman, TGC Renewables, discusses

The number of businesses that have recently shut up shop is concerning: Q-Cells, Solar Hybrid, Solon, Solar Millennium, and in the US, Solyndra.

The reasons for the demise have been documented.  Austerity-hit European governments have been forced to roll back financial commitments to renewable energy technology, leading to a fall in projects and a drop in demand for solar panels.

This, coupled with Chinese exports that can be manufactured and exported for less than the cost of European and US products, means the market was always going to be tough.

What does this mean for UK solar developers and installers? The cuts to the Feed-in-Tariff (FiT) made by the UK government were predicated on low solar panel prices, caused, it was said, by a glut in the market.

With the exit from the market of a number of manufacturers, there will be a contraction in supply.  How this reduction in supply affects the market will be key.

The amount of technology available in the market worldwide, should keep panel prices low.  It’s important to remember, however, that the Chinese intend to develop a large internal market, which could certainly take up much of the non-tier 1 product and maybe even some of the tier 1. This demand in China and other markets such as India could create a contraction in supply and cause the panel prices to rise rather than fall in the UK. China has stated its aim to drive towards grid parity and the government cannot assume that prices will continue to fall at the rates we have seen in the last 12 months.

Econonmically, the issue is probably one of market correction.  Those firms least able to compete due to production inefficiencies, or who, like Solyndra, backed the wrong technology will be forced to exit the market.

Whilst nobody welcomes the prospect of failed businesses and unemployment, it is a sign that the industry is maturing. Under times of financial austerity, the sector has to prove it is capable of providing a clean and affordable alternative.

For UK developers, in the short term it’s likely to be business a usual.  Manufacturers in the Far East will provide panels at affordable rates. As long as these supplies are backed by solid warranties and after-sales support, the UK industry should be able to set its sights on grid parity – the issue is whether government works with us to achieve that goal in a realistic time frame.