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Introduction

This report looks at the drivers in the UK domestic solar photovoltaic (PV) power market and potential risks to the industry’s future, and provides recommendations for companies seeking to exploit this growing market.

Highlights

  • Should the market not be adversely affected by the major feed-in tariff (FiT) review in 2H2015, the UK domestic PV market offers significant opportunities for utilities and other companies wishing to diversify their portfolios by offering additional energy services.
  • Although current levels of solar PV are not high enough to cause huge disruption to electricity distribution networks, the critical figure of 10GW of installed capacity is likely to be reached on or before 2020.
  • Distribution network operators will have to invest in their physical infrastructure to balance the increased volatility that widespread deployment of solar will cause.

Features and Benefits

  • Analyzes the UK domestic PV market.
  • Forecasts the UK domestic PV market to 2020.

Key questions answered

  • What are the main drivers of the UK domestic PV market?
  • How big will the UK domestic PV market be in 2020?

Table of contents

Summary

  • Catalyst
  • Ovum view
  • Key messages

Recommendations

  • Recommendations for utilities

Solar will drive the delivery of the UK’s renewables targets

  • The UK is one of the most important European markets
  • Solar plays a vital role in UK renewables targets
  • Domestic PV as a proportion of total PV is in line with mature European markets

The UK domestic solar PV market is driven by subsidy

  • Solar deployments are highly sensitive to FiT changes

UK energy policy toward solar remains positive

  • The UK is far from meeting its renewables generation targets by 2020
  • DECC’s future PV strategy focuses on small to midsize installations
  • DECC’s policy is heavily influenced by positive public attitudes toward solar

PV installation costs continue to fall

  • Costs have fallen in line with forecasts, but uncertainty about the future is increasing
  • The installation learning rate is slowing, but remains significant to 2020

FiTs are vital to the UK domestic PV market

  • FiTs make the market possible
  • UK solar is more reliant on FiTs than other renewables
  • The removal of support for solar has seen markets tail off in many European countries
  • Nothing indicates the removal of FiT in the near term
  • The results of the 2015 general election could increase FiT uncertainty
  • The biggest short-term threat is the 3-year FiT review in 2H2015

Falling installation costs, FiT degression, and managing the path to subsidy-free solar

  • Large-scale solar will become subsidy-free by 2025
  • FiT degression is designed to align with falling installation costs
  • Subsidy-free solar can become a reality

Consumer confidence is critical to UK solar’s future

  • Degression’s adverse impact on solar is due to poor education
  • The industry must improve consumer confidence in solar
  • Consumer confidence suffers from poor education
  • The Green Deal has failed to drive domestic solar in line with other energy-saving initiatives

Fragmentation is a significant market barrier

  • A lack of well-known brands and significant fragmentation hinder the market
  • MCS-accredited installers are the current driving force in the industry
  • Installers and tech-focused buyer’s guides are cold toward thin film

The UK market will record strong growth to 2018

  • 20GW by 2020 is unlikely; 10GW is more reasonable
  • There will be no ubiquitous solar without significant investments in balancing technology

Appendix

  • Author

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