The UK's solar PV industry is likely to experience a slowdown in 2020 with annual capacity additions expected to be around 220 MW, as per GlobalData. Earlier, the market research firm forecasted newly installed capacity of 290 MW in 2020. The COVID-19 pandemic has a role to play in this revised projection.
"Quarantine measures are likely to see development timelines being pushed back by at least a quarter, impacting the deployment of solar projects. Before the COVID-19 outbreak, the solar industry was coping with policy changes, which impeded its growth," said Somik Das, Senior Power Analyst at GlobalData. "However, the pandemic is now expected to slow the sector down even further. The annual installed capacity was projected to reach 290 MW in 2020 but has been revised to 220 MW."
However, GlobalData points out, the industry is not without problems of its own as the market depends on imports to supply the demand since there is no domestic manufacturing happening here. Policy changes haven't really been in favor of the industry as such. First the government stopped supporting large-scale solar and slashed feed-in-tariffs (FIT) for small-scale systems. Its replacement, Smart Export Guarantee in 2019, slowed down the domestic market, it notes. In 2019, UK added 233.4 MW of new solar PV capacity.
And now, the pandemic has ensured activities for under construction projects come to a standstill, not to forget supply chain disruptions. These factors, as per GlobalData, will shoot up equipment prices 'hurting the economic attractiveness of the solar market'.
Das further adds, "Short-term power purchase agreements (PPAs) gradually emerged to provide relief for solar PV developers. But now, in the wake of the pandemic, the rising equipment costs would surely cause headaches to the solar PV developers. Thus, government need to intervene with measures to ensure minimal damage is caused to the interests of the developers, in this sector."
The UK government next round 4 of auctions under its Contracts for Difference (CfD) scheme for the first time allows solar to be a part of the competing technologies to land government support.