According to data released this week by the UK government Department of Energy and Climate Change (DECC) the number of residential solar panel installations dropped dramatically after the 3rd of March deadline. While in the last week before the deadline there were almost 20.000 residential installations, in the week after there were just over 1.000, which represents a demand drop of 95%.
The graph clearly shows the number of weekly installations and the two boom-bust cycles that the UK residential solar market has experienced in the last year. The first boom-bust cycle was driven by the government announcement that Feed-in-Tariffs would be cut from 43 pence towards 21 pence. This announcement was made early November, and resulted in a large boom up to the deadline date in December. During this six-week period more than 100.000 solar panel installations were completed – the same total amount as in the other forty-six weeks of 2011.
The second solar panel boom-bust cycle started on the 25th of January 2012. This was when the government lost their second court case (in the High Court) against the solar industry for making the Feed-in-tariff cuts. After this the government appeal at the Supreme Court kept uncertainty in place whether the FiT rate to be paid would be 21 or 43 pence. However, consumers took the opportunity and demand in the five-week period up to the 3rd of March was over 50.000 solar panel installations – more than 7 times the demand seen during the five weeks of January.
However, the 3rd of March deadline ended the opportunistic buying of consumers looking for a Feed-in-tariff rate of 43 pence, and demand fell off the cliff again. Dropping to just over 1.000 installations in the last week, demand is currently less than half than that seen in June last year. This is despite returns that are excellent, since solar panel installation prices dropped in half since early 2011.
With over 4.000 MCS accredited solar panel installers, having 1.000 installations per week is certainly not enough to maintain the industry. This means each solar installer would do only one installation per month. Further cutting down the addressable market through the EPC requirements that come into place in April 2012 will put further pressure on industry. It will be a tough few months ahead for solar installers, and only more consumer awareness about the excellent returns on 21 pence can increase demand to acceptable levels.