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The UK Solar Market & PV Products Barry Marsh – UK Country Manager.

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1 The UK Solar Market & PV Products Barry Marsh – UK Country Manager

2 UK has been involved in Solar PV since late 1980’s Industry struggled to get UK Government to recognise the future potential of Solar Subsidies provided were token gestures with no future vision Up to April 2010 a total of only 30MW was installed 2

3 We designed and demonstrated the use of PV as a building material in the 1990’s Government supported this approach 3

4 Government saw this as being a Domestic program but with a installation size limit of 5MW! Government forgot about their BIPV strategy! Government were surprised by the interest and innovation of offers. In the first year the installations exceeded predictions by 50% 4

5 Large Solar Roofs and Fields were built / planned Government excluded them from August 2011 Industry moved to 50kW projects 5

6 6 The UK Growth Industry has grown from 3,000 jobs pre FIT to over 30,000 Low carbon green jobs (Tax benefit to Treasury!) Over 4,000 Companies are now registered as Solar Installers (Tax benefit to Treasury!) Training courses developed with high levels of participation Building Industry has finally got involved in Solar Distribution networks have been established UK manufacturing has doubled (Sharp and Romag) UK Growth

7 7 The UK Growth MCS at times has struggled to keep up with the growth in product and the rate of installer applications REAL increased staffing numbers to handle the enquiries (and stop the Cowboys!) Utilities struggled to understand rate of connection and to process the FIT applications Ofgem struggled to keep up with registrations The Press however no longer considered the Solar Industry to be the green sandal brigade – we are now, at last, a credible energy industry UK Growth

8 8 Industry should congratulate itself! No matter what changes Government made to the FIT during the last year we adapted and got on with delivering Large Scale Fast Track Review – Industry showed you could deliver 5MW Fields in 6 weeks and 1MW Roofs in 4 weeks Loophole Closure – Industry showed you could deliver 5MW Fields in 4 weeks December 12 th created, yet another “gold rush”, with over 100MW / week being installed generally on Domestic installs March 7 th another goldrush June 30 th – another goldrush? Industry should congratulate itself

9 9 Industry should congratulate itself! Government told industry told to concentrate on Small Scale Domestic industry, time for an install reduced from 3 days to 1 day Government surprised by the amount of generation capacity Solar added to the grid, faster than any other technology Many customers are very happy as their system is generating more than predicted (10 -25%) Many customers have changed their behaviour to the use of energy as a result of having PV. Industry should congratulate itself

10 Little previous evidence of generation from PV in the UK Design programs tend to produce conservative results Reports of systems generating 10 – 20% more than predicted Latest Met Office map provides more detail FIT claims will provide true evidence of performance 10

11 Around 250,000 installations since the introduction of the FIT now 1.15GWp, Ofgem only records 883MWp Around 70% (by capacity) of the installations are Domestic installs By end of March 2012 around 1.3GWp will have been installed 11

12 12 MW

13 13 Rate of installs

14 DateDECC NewCumulativeActual NewCumulative 31/03/ MW 78MW 31/03/ MW 137MW 1075MW* 1153MW* 31/03/ MW 284MW 31/03/ MW 533MW 31/03/ MW 832MW Despite incorrect Budget put forward to the CSR – Treasury will not allow it to be corrected The Minister always said we had to keep to the budget (£860m) This is why the STA had called for a 25% cut in June 2011 We needed to deliver a sustainable industry 9 *To Date 14

15 Costs driven down Demand driven up Modules Technology Mass production techniques BOS Alternatives Technology Labour Familiarity Efficiency DomesticsPower ParksCommercial Industry sectors working together to achieve a common aim 15

16 Bankability – function of reliability Bankability Technology Construction Quality Financial Stability Legal Warranties Environment Operation 16

17 LDK Solar Company 17 LDK is a large-scale, low-cost, vertically-integrated manufacturer of high quality solar products. LDK is one of the world’s leading, high quality low-cost solar manufacturers Founded in Xinyu, China in 2005 and listed at NYSE since June ,000 Employees and estimated $3.6 Billion Sales in 2011 The Company has pursued a 2.0 GW large scale vertical integration production capacity to continuously reduce PV product costs Overview

18 LDK Solar Company 18 Demonstrates Leadership in PV Manufacturing Worldwide 2.0GW Vertically Integrated Solar Manufacturer Proven Cost Reduction Roadmap Strong and Diversified Customer Base Key Strengths Sustainable and Attractive Growth strategy Strong Financial support from Chinese Bank

19 Sand to PV Module – ‘in-house’ Silicone Wafer Silicone Ingot PV Module components PV Cell PV Module PV System Silicone recycling 19

20 Diversified and High-Quality Customer Base 20 LDK supplies leading solar companies with PV products around the world Canada Czech Republic HHI- KOMAX Japan India Taiwan France U.S. Belgium Greece Big Solar Australia KOMEX Korea NetherlandsGermany Portugal Spain China “Golden Sun” Projects Wafer Customers Module Customers Polysilicon Customers Italy

21 LDK’s Grid Parity Roadmap 21

22 V2 - November © LDK Solar Co., Ltd. All rights reserved. E.&O.E. LDK Solar PV Modules Quality 22 0/+5 Wp power classification 10 years warranty on materials, 25 years warranty on the output power High conversion efficiency Ability to withstand high wind and snow, under extreme operating temperature variations Rigorous quality control meeting the highest international standards manufactured using high-quality certified components MANUFACTURED UNDER STRINGENT QUALITY STANDARDS

23 LDK Solar PV Modules Certifications 23 IEC EN 61215, IEC EN , CE Conformity UL /03/15 Ed:3 Rev:2008/04/08 UL and Canadian standard for safety flat-plate ISO 9001:2008 Quality Management System in the facilities CEC Listed: modules are eligible for California rebates PV CYCLE: voluntary module take back and recycling program MCS: The Microgeneration Certification Scheme UK JET PVm: Certification for PV modules Japan COMPLYING WITH THE WORLDWIDE MAIN DIRECTIVES ON SAFETY AND OPERATION

24 LDK Solar environmentally friendly PV modules 24 SINCE THE BEGINNING OF 2010, LDK SOLAR IS A PROUD MEMBER OF THE PV CYCLE ORGANIZATION LDK Solar is committed to finding new ways to make its solar modules more and more environmentally friendly. As a full member of the non-profit PV CYCLE association, LDK Solar is committed to establishing a voluntary Program for free pickup and recycling at the end-of-life of solar modules. This activity will minimize pollution and waste and will allow the recycling of useful raw materials for the production of new modules

25  Government Response to Consultation on Comprehensive Review Phase 1 – Tariffs for solar PV  Consultation on Comprehensive Review Phase 2A: Solar PV cost control ◦ Closing date 3 rd April 2012  Consultation on Comprehensive Review Phase 2B: Tariffs for non- PV technologies and scheme administration issues ◦ Closing date 26 th April

26 From the 1st April 2012 domestic and non-domestic buildings will have to hold a level D EPC – if not lower tariff of 9p will apply No transitional arrangements Buildings that are outside scope of EPC will be exempt from the energy efficiency requirement (await Ofgem guide) If building is outside scope of EPC but is connected to a building that is within scope e.g. a farmhouse, then the connected building will need to meet level D ◦ Buildings within scope of an EPC defined by the Energy Performance of Buildings Directive “a roofed construction having walls, for which energy is used to condition the indoor climate; a building may refer to the building as a whole or parts thereof that have been designed or altered to be used separately” 26

27 Tariff period for solar PV could be reduced from 25 to 20 years, which would bring it in line with other technologies Asking whether index linking of tariffs should:  Be removed,  Be changed from RPI to CPI Decision on PV may be applied to all technologies Export tariff could be increased, but still collecting evidence. If increased, generation tariff likely to be reduced to compensate Tariffs drop below 2 ROC - await outcome of the RO Banding Review to see whether solar PV will still get continue to get 2 ROCs from

28 DECC new staff and recognise the benefit of Solar Found an additional £1.1bn to 2014/15 to keep FIT Aspiration by Government to see 22GW of PV installed by 2020 (4.5GW by end of 2014/15 FIT year) – but only if costs come down Linked to aggressive cost reduction – particularly PV – where tariff will be based on a 4.5% - 8% return rather than absolute 4.5% Cap of 21p kWh set as maximum tariff for any FIT technology Link between energy efficiency standard and receipt of a full tariff (initially PV) has been established Base level tariffs will not be increased with RPI post April 2012 increase So tariff options are:- 28

29 29 FIT TABLETo March 3rd To June 30th From July 1 st (A) From July 1 st (B) From July 1 st (C) 4kW or less (newbuild) 37.8p 21.0p 13.6p 15.7p 16.5p 4kW or less (retrofit) 43.3p 21.0p 13.6p 15.7p 16.5p 4 – 10kW 37.8p 16.8p 10.9p 12.6p 13.2p 10 – 50kW 32.9p 15.2p 9.9p 11.4p 11.9p 50 – 100kW 19p 12.9p 7.7p 9.7p 10.1p 100 – 150kW 19p 12.9p 7.7p 9.7p 10.1p 150 – 250kW 15p 12.9p 5.8p 8.0p 10.1p 250kW – 5MW 8.5p 8.9p 4.7p 6.8p 7.1p Stand alone 8.5p 8.9p 4.7p 6.8p 7.1p A if 200MWp exceeded in March and April 2012 B if between 150 – 200MWp C if less than 150MW Below 9p/kWh move to 2ROC’s

30 30 BandTariff Pt1 April 2012 Tariff Pt 2 July 2012 Tariff Pt 3 Oct 2012 Tariff Pt 4 Apr 2013 Tariff Pt 5 Oct 2013 Tariff Pt 6 Apr 2014 Tariff Pt 7 Oct 2014 Tariff Pt 8 Apr 2015 < 4kW 21p 13.6p 12.9p 11.6p 10.4p 9.4p 8.5p 7.7p 4 – 10kW 16.8p 10.9p 10.4p 9.4p 8.5p 7.7p 6.9p 6.2p 10 – 50kW 15.2p 9.9p 9.4p 8.5p 7.7p 6.9p 6.2p 5.6p kW 12.9p 7.7p 7.3p 6.6p 5.9p 5.3p 4.8p 4.3p kW 12.9p 5.8p 5.2p 4.7p 4.2p 3.8p 3.4p 3.0p MW 8.9p 4.7p 4.1p 3.7p 3.3p 3.0p 2.7p Stand alone 8.9p 4.7p 4.1p 3.7p 3.3p 3.0p 2.7p

31 31 BandTariff Pt1 April 2012 Tariff Pt 2 July 2012 Tariff Pt 3 Oct 2012 Tariff Pt 4 Apr 2013 Tariff Pt 5 Oct 2013 Tariff Pt 6 Apr 2014 Tariff Pt 7 Oct 2014 Tariff Pt 8 Apr 2015 < 4kW 21p 15.7p 14.9p 13.4p 12.1p 10.9p 9.8p 8.8p 4 – 10kW 16.8p 12.6p 12.0p 10.8p 9.7p 8.7p 7.8p 7.0p 10 – 50kW 15.2p 11.4p 10.8p 9.7p 8.7p 7.8p 7.0p 6.3p kW 12.9p 9.7p 9.2p 8.3p 7.5p 6.8p 6.1p 5.5p kW 12.9p 8.0p 7.6p 6.9p 6.2p 5.6p 5.0p 4.5p MW 8.9p 6.8p 6.5p 6.0p 5.4p 4.9p 4.4p 4.0p Stand alone 8.9p 6.8p 6.5p 6.0p 5.4p 4.9p 4.4p 4.0p

32 32 BandTariff Pt1 April 2012 Tariff Pt 2 July 2012 Tariff Pt 3 Oct 2012 Tariff Pt 4 Apr 2013 Tariff Pt 5 Oct 2013 Tariff Pt 6 Apr 2014 Tariff Pt 7 Oct 2014 Tariff Pt 8 Apr 2015 < 4kW 21p 16.5p 15.7p 14.1p 12.7p 11.4p 10.3p 9.3p 4 – 10kW 16.8p 13.2p 12.5p 11.3p 10.2p 9.2p 8.3p 7.5p 10 – 50kW 15.2p 11.9p 11.3p 10.2p 9.2p 8.3p 7.5p 6.8p kW 12.9p 10.1p 9.6p 8.6p 7.7p 6.9p 6.2p 5.6p kW 12.9p 10.1p 9.6p 8.6p 7.7p 6.9p 6.2p 5.6p MW 8.9p 7.1p 6.7p 6.0p 5.4p 4.9p 4.4p 4.0p Stand alone 8.9p 7.1p 6.7p 6.0p 5.4p 4.9p 4.4p 4.0p

33 Option C is the best we will get – 16.5p/kWh band Move to 2ROC’s as soon 9.0p reached (but how long 2013?) Export Tariff should be increased (minimum of 5p) Installed pricing may not drop at rate predicted by DECC and industry could stall - DECC must cater for this. Industry may have to accept 20 year (like ROC’s) Clarity on Level D – eg ground mount / barn next to building Do not accept no index link (otherwise no investors) Clarity on Community Model / Social Housing DECC must add Solar to Roadmap (22GW by 2020) DECC must work with Solar Industry - need time to adapt 33

34 With the 16.5p/kWh tariff and 5p/kWh export, the domestic customer, with money in the bank, will still get a reasonable return and protect himself from part of future electricity prices rises May work if customer borrows the money Will Free Solar still work? 34

35 If 80% aggregation of tariff applied Social Housing and Community projects may NOT work If 16.5p/kWh and 5p/kWh offered it will just work, but is very tight and only in the better parts of the UK using a not for profit type arrangement Client may have his own funding 35

36 With the 11.9p/kWh and the customer using the electricity in the better parts of the UK this will work if the customer has the money or raises his own finance, depending on the EPC band of the building Barns will work if they are exempt from EPC! 36

37 Ground mounted solar fields using 2ROC’s will work in the better areas of the UK – South! Funding sources will have to be long term investors Negotiated export electricity will need to be at 6p/kWh Selling to a customer through a PPA may attract a slightly higher tariff 37

38 With new build most projects, either, have to achieve a Carbon rating or have a requirement under Planning and therefore no matter how the tariff reduces this market will still continue. 38

39 Some Clients may well continue to develop Solar projects even with the reduced tariffs in order to show a Green image, save on Carbon or for other Corporate/Brand reasons 39

40 2010 FIT year was 78MWp 2011 FIT year likely to be 1050MWp 2012 FIT year likely to be 1000MWp including 250MWp of Ground Mounts (DECC have only 500MWp allowed) 2013 FIT year likely to be 1000MWp (DECC have 1000MWp) 2014 FIT year likely to be 1200MWp (DECC have 2000MWp) 40

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45 Thank you Barry Marsh – UK Country Manager


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