UK solar: Should it stay or should it go?

Compared to last year’s Solar Energy U.K. trade show, when the mood was upbeat and the country’s solar business was experiencing an unprecedented boom, this year’s event radiated mixed feelings and a bit of worry.

Taking place in Birmingham Oct. 13-15, Solar Energy U.K. has shifted its focus to the consequences of the recent solar remuneration policy changes and what the future will look like for solar.

The show was well visited, with attendees at one lively discussion far exceeding seating capacity, resulting in standing crowds packing the venue for the debate.

Nick Boyle, CEO of Lightsource, a British developer that operates and maintains the largest portfolio of commercial ground-mounted and rooftop solar photovoltaic projects in the U.K., said the last five years had been a roller coaster for the solar industry but the recent policy changes meant the industry would shrink. Rationalization and consolidation appear inevitable now, with larger players buying smaller ones, Boyle added.

There are still some smart things to be done, Boyle said, referring to new ways of cutting costs further and to new innovative ways of running businesses, but nevertheless stressed that the sector had difficult times ahead.

Angus Macdonald, CEO of British Solar Renewables, an integrated solar development company, agreed. Macdonald said consolidation would occur and that businesses would need to offer integrated business solutions that include other technologies apart from PV, e.g. battery storage, to survive.

The overall picture from other discussions at the trade show indicated that, at least in the next two years, there would only be specific types of projects serving specific purposes, such as power purchase agreements between businesses and new PV installations.

Local developers struggling

Speaking to pv magazine, one local developer who preferred to remain anonymous, said, “There is no doubt that the U.K.’s PV business today is a mature one. This means there are very trustworthy firms around.” That was not the case when the U.K.’s PV industry first took off, however, he stressed.

“There were a lot of cowboys back then. If the U.K. PV industry pauses for a few years, e.g. until 2019, and the government then realizes it is behind its green energy targets and opens the PV market again via a more friendly subsidy regime, then who is going to be around? We don’t want to return to the cowboys industry. We want to ensure our quality businesses remain in place and don’t disappear."

Similarly, another local firm commented: "The U.K. PV [sector] is a home-grown industry, which means it is dominated by British firms or international businesses with set-up U.K. teams. If we want these businesses to continue bringing costs down, such as capital or business running costs, we need to ensure there is scale to allow them exist."

The developer expressed ambivalence about the country’s Contracts for Difference (CfDs) tenders, pointing out that the second CfD auction, originally set for October, had been postponed and the government had yet to announce a new date. “Bear in mind, though, that especially under the CfDs structure, a PV developer needs to invest substantial amounts of capital without a guarantee he will win at the CfDs auction."

Most local developers agreed that international firms with diversified portfolios were better positioned to participate in CfD tenders because they can bear higher risks.

At the moment, it appears the big fish are set to eat the small fish, but there are also concerns as to whether there will be any local fish left at all in the end.