Used correctly, subsidies exist to get nascent, vital technologies off the ground and into the mainstream. But for this very reason, when the technology scales, subsidy support can and should end.
Amber Rudd has fundamentally restructured Feed in Tariffs (FiT) for this very reason. But at Solarsense, we believe the change is not cause to commiserate. Rather, let’s celebrate solar’s approaching triumph.
When technologies move beyond subsidy, everyone wins
Today, prices of solar PV have fallen. And so too have subsidies. In the real commercial world, this is normal, and simply means that the ROI is very similar to how it was before, just that everything has become more competitive as the marketplace has expanded.
The truth is; life after FiT has separated wheat from chaff in the industry as a whole. The strong companies have weathered the storm, and now investors in solar need not obsess over FiT. The subsidy cash has done its job; to bring solar to the point where it no longer needs handholding, and breaks free to disrupt the renewables market on its own two feet.
Further evidence of solar’s strength comes from National Grid and DECC. DECC is pushing hard on its Demand Side Response (DSR) solutions, partly because renewables can cause technical grid issues to do with electricity frequency, which DSR effectively solves.
The key point is, if minds at DECC weren’t convinced a lot more solar was coming online in the UK, they wouldn’t be pushing so hard for DSR solutions to frequency issues. Therefore, DECC must be sure solar is a long term winner for UK energy security.
The voices behind today’s bright, FiT free future
“We have to get the balance right and I am clear that subsidies should be temporary, not part of a permanent business model. When the cost of technologies come down, so should the consumer-funded support.” Amber Rudd, quoted in Business Green.
“Solar is popular and cost effective and the price is rapidly dropping.” Green MP Caroline Lucas in Business Green.
“The nature of high electricity self-consumption and a maturing commercial market should ensure solar is still a good choice for many power-hungry businesses across the UK looking to reduce their bills and use the empty space on their roofs.” Paul Barwell, chief executive of the Solar Trade Association, in Business Green.
Business drives on as solar goes FiT free
Since FiT changes, Solar Power Portal (SPP) recently pointed out the market actually shows firms entering, not leaving the UK solar arena. The trends therefore are not of a frightened, beleaguered sector dashed by FiT alterations. Instead, manufacturers are rushing to publicise their support for solar in the UK. Solar remains ROI-prompt and affordable. This says nothing of the CSR and greener branding opportunities available to those who opt for solar.
Indeed, investing in the sun within an environment which, to the initiated at least may appear challenging, illustrates bravery and strength and arguably stronger greener credentials. When you brand on perceived bravery, your brand grows.
Japan proves how the UK solar market is set for greatness
The final word is down to Energy Voice magazine. It describes Japan’s astonishing take up of solar, where subsidies too have recently been reduced.
The Japanese example reiterates that when solar becomes competitive, subsidies drop, and technology steps up; not only delivering better solar panels, but more efficient ways to get solar power into the grid in the East.
‘The next few years could see a definite, but gradual, shift in Japan’s energy mix, with solar power taking over from fossil fuels and nuclear,’ writes the journal.
‘This is exemplified by the fact that by March 2016, Japan plans to close 2.4 GW of oil-run power plants. By using technology to overcome the challenges the industry faces, another boom in solar could be just around the corner for Japan.’ A bright future, with brave investors, is at hand for the UK too.