Examining the U.K. government’s recently announced solar strategy, Josefin Berg, solar research senior analyst at market research group IHS, says the plan, along with prevailing investment conditions for ground-mounted PV plants, will drive total U.K. PV installations to 2.5 to 3 GW annually until 2018.
The U.K. government released the second part of its U.K. Solar Strategy in early April. While expressing continued support for the PV industry, the plan shifted the focus away from ground-mounted projects towards rooftop systems.
In a report released Tuesday, IHS says the government plan "breeds optimism among participants in the U.K. PV market" but adds that the document remains vague on exact support measures to spur the commercial rooftop segment. "Some key barriers are inherent in the nature of the U.K. real estate sector, such as the relation between tenants and owners, as pointed out in the strategy document."
Nevertheless, IHS has raised its near-term forecasts for the U.K., as the strategy document along with signs of high developer activity indicate continued growth. By 2018, IHS forecasts the U.K. to have 16 GW of installed PV capacity, 13 GW of that new capacity installed over the next five years. This would put the U.K. on track to overshoot the government’s target of 20 GW by 2020, which may result in a revised support environment. This year, IHS expects 2.4 GW of new PV installations in the country.
Based on the 922 MW of utility-scale systems that IHS estimates were installed in the first quarter of the year, the group predicts utility-scale installations will to peak in 2014 at a total of 1.5 GW. It points out that the 922 MW were installed ahead of the renewable obligation certificates (ROC) banding being cut from 1.6 ROC per megawatt hour to 1.4 ROC per megawatt hour. From 2015 onwards, IHS says the ground-mount segment will decline gradually as the incentive scheme changes and the focus shifts towards commercial rooftops.
"The government’s explicit focus on rooftop PV systems addresses the public concerns for the use of land, which have haunted the on-shore wind sector. In counties like Cornwall, Devon and Somerset, where IHS estimates that 25% of the ground-mount PV capacity is installed, the impact of PV on the landscape may lead to rising concerns. The installation of PV systems on commercial roofs, on the other hand, faces little risk of opposition."
Looking at the competitive landscape, IHS says it considers the U.K. less fragmented than other European PV markets. According to IHS’ PV project database, the five largest EPC companies installed 46% of the utility-scale projects in the first quarter of 2014; these included Conergy, British Solar Renewables, Martifer Solar, Grupotec and Isolux Corsan.
The countrys largest investor remains Lightsource Renewable Energy, with 190 MW of the utility-scale projects installed so far in 2014.
"In wake of the solar strategy, these companies will need to successfully address the rooftop market in order to retain market share after 2015."
IHS adds that Lightsource has already announced the opening of a rooftop PV division, highlighting the expected change in PV demand in the U.K. and the need for companies to diversify away from ground-mounted projects in order to remain successful.