UK and Italy: invest in solar or "pay the price"


While grid parity for solar photovoltaics for residential electricity consumers may appear some years off in the U.K., GlobalData consultant Jonathan Lane has warned that gas price instability has made solar a smart choice for consumers. One component to Lane’s warning is that 2013 will be difficult for utilities in the face of gas price instability.

In a statement making the warning, Lane said: "Twenty-thirteen looks pretty grim for both energy consumers and utilities, prices are sure to rise again for energy consumers, as both renewable subsidies and higher oil prices push electricity and gas prices higher across the continent."

Lane, GlobalData’s head of consulting for power utilities, continued: "Renewable subsidies represent a cost and an opportunity for domestic energy consumers. Those that can fund the installation of solar PV, or borrow the money to do so, should invest. Those that can’t will have to pay."

Further south in Italy, a market in which ample sunshine makes solar an even more attractive investment, GlobalData has pointed to gas prices being susceptible also, due to its oil-indexed gas price. "Now is the time to invest in Italian solar, and utilities should be engaging with customers to fit and manage the panels alongside supply contracts," said Lane. "Indeed, it is possible that solar photovoltaic starts to lower electricity prices in Italy post-2014."

The U.K. government has also taken steps to simply tariffs to ensure consumers are on the best tariff, however Lane concluded that it is uncertain how this will play out. The U.K.’s coalition government has also been pursuing policies to facilitate seam gas exploitation, however GlobalData makes no reference to this. Critics have described this policy as representing a "dash for gas", and analysts at Bloomberg New Energy Finance have said that gas price reductions, such as those seen in the U.S., are unlikely to occur due to the U.K. being part of an E.U. wide gas market.

Looking at the effect of rising energy prices on low-income households, GlobalData’s Lane said that pressure would mount as more households dip into the fuel poor category. "Policy makers may have to be radical as energy prices grow as a political issue," said Lane. "Utilities will also be in the firing line as consumers smell profiteering at their expense. They will need to consider how to make money out of energy efficiency rather than selling kWh’s, and will need to do this more quickly than they might have anticipated."