5 reasons to stay in the Solar PV market

News in recent weeks has been filled with mixed messages about solar PV. The first of November heralded another cut to the FIT solar PV generation tariff from 16p to 15.44p/kWh. Whether these cuts are in line with module price drops as intended is a subject of popular debate, but one thing is for sure – the tariff cuts have cut consumer demand, bankrupting many companies. This spurred an industry damages claim against the government, with five companies joining the original three to claim £50 million in damages over the cuts introduced since August 2011.

There is no question that consumer demand has dropped dramatically. The question remaining, therefore, is whether there is a sustainable industry left. It will certainly not be like the bumper days of the 43p Feed in Tariff, but there will be an ongoing demand:

  1. People are buying;The degression (cuts) in the Feed in Tariff have reduced demand but demand has remained and seems to have reached a plateau of about between 1 and 2 thousand domestic sub 4 kW installations per week, or about 400,000 kW capacity installed in total (sub 50kW). Ignoring the peaks that occur prior to the degressions, the general trend has been upwards from the slow summer months. This suggests that savvy consumers are coming back to the market, and are beginning to understand that there are still reasonable returns to be made from Solar PV.Number of Solar PV installs per week
  2. General Market Trends;Over and above the actual numbers of installations, the numbers of searches that are made on Google for Solar PV on a weekly basis are levelling out to around 20% of their peak in November 2011, at the height of the rush prior to the first tariff cut. This again suggests that interest is levelling out and canny consumers are getting the message about Solar PV. Awareness of the technology is there, so expensive market education is not necessary. These searches are being made by consumers who are looking to time their purchase to maximise their returns.Google Searches for Solar PV
  3. Fuel Prices;with 5 out of the 6 major energy suppliers announcing price increases of over 6% it seems that real energy inflation is rising above inflation. DECC’s own projections show an expected increase in energy prices of over 20% (based on gas price projections) and given our increasing reliance on electricity (largely driven by our love of gadgets and appliances)Appliance usage growthHousehold energy use for appliances (TWh) (DECC, Great Britain’s Housing Energy Fact File)

    This all points to large increase in the fuel and electricity price in future. In fact, in November 2011 the National Grid predicted some quite significant increases in electricity prices over the coming years:

    National Grid Energy Price Forecast

    The savvy consumer will soon understand that locking in a FIT rate early will help to insulate them against these price increases later, and so their calculations of the returns are likely to be the low estimate in the face of increasing energy prices. Also, the higher the price of electricity rises, the more cost effective that solar PV becomes as a solution in it’s own right, without any FIT subsidy – people will soon start to work this out.

  4. House Prices and the effect of Renewables; The long held fear that consumers did not understand what the consequences of fitting renewables to their home would be is beginning to lift. ING Direct’s recent survey that suggests that solar panels are the most important “non essential” factor in encouraging a prospective buyer to agree to purchasing a house. Our own research has highlighted similar view from estate agents, who see solar panels as a selling point (Read the article here). With this uncertainty turning to a positive, the more sceptical buyers will start to see that solar electricity is not the white elephant that they once believed it to be.
  5. Consolidation; Painful as it has been as the market has ridden the rollercoaster of the FIT changes, this has meant that many companies have fallen out of the market, leaving the better and more efficient remaining. These companies will be able to consolidate their position and start to operate in a more stable and mature market, which will hopefully lead to a recovery in margins for all.

So where does Be Energy Smart fit into all this? Well, in a tough industry climate such as this one, we provide the cheapest way to generate sales. We bring economies of scale, both regionally and across the range of renewable technologies, that smaller regional firms simply cannot achieve. This makes us very cost effective when compared with our competitors.

We guide customers in an intelligent, easy to understand way, so that by the time they reach you, customers are well informed and ready to buy your services. Register to get leads for your business today.

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