As the world continues to battle climate change, renewable energy sources have become increasingly popular. Solar power is one of the fastest-growing renewable energy sources, and the UK has seen tremendous growth in the solar power industry in recent years. In this blog post, we will explore the growth of the solar power industry in the UK and the investment opportunities it presents.
Overview of Solar Power in the UK
Solar power is the third-largest renewable energy source in the UK, with wind and bioenergy being the top two. The UK is well-suited for solar power, with plenty of sunlight throughout the year. According to the Solar Trade Association, there are over one million solar installations in the UK, ranging from small residential installations to large-scale commercial projects.
Growth of the Solar Industry in the UK
The UK has seen significant growth in the solar power industry in recent years. In 2010, there were just 26 MW of solar capacity installed in the UK. By 2020, that number had risen to over 13 GW, a staggering increase of over 50,000%. The growth of the solar power industry in the UK has been driven by falling costs, government incentives, and increased public awareness of the need for renewable energy sources.
Investment Opportunities in the Solar Power Industry
The growth of the solar power industry in the UK presents a range of investment opportunities. One of the most popular ways to invest in solar power is through solar bonds. Solar bonds are investments in solar projects that offer a fixed rate of return over a set period. Another way to invest in solar power is through solar funds. Solar funds are investment vehicles that pool money from investors to finance solar projects.
There are also opportunities to invest in solar power by installing solar panels on your own property. Installing solar panels on your property can help reduce your electricity bills, and any excess electricity you generate can be sold back to the grid through government-backed schemes.
Challenges Facing the Solar Power Industry
Despite the growth of the solar power industry in the UK, there are still challenges that need to be addressed. One of the biggest challenges facing the industry is the reduction of government incentives. In 2019, the UK government ended its feed-in tariff scheme, which provided financial incentives for homeowners and businesses to install solar panels. This has made it more difficult for smaller-scale solar projects to be financially viable.
The Smart Export Guarantee (SEG) was introduced in January 2020 as a replacement for the feed-in-tarriff (FIT) scheme. Unlike FIT, which was much more generous, SEG pays consumers only for power exported to the grid, offering no payment for energy harvested. Estimates indicate that recouping the costs of installing a solar system will take 20 years with both SEG and solar energy savings if you’re home only in the evenings. Those at home all day can expecy to recoup their costs in about 12 years.
Another challenge facing the industry is the lack of battery storage. Battery storage is essential for storing excess solar power generated during the day to be used during the night or on cloudy days. While battery technology has improved in recent years, it is still relatively expensive, making it difficult for smaller-scale solar projects to incorporate battery storage.
The solar power industry in the UK has seen tremendous growth in recent years, driven by falling costs, government incentives, and increased public awareness of the need for renewable energy sources. This growth presents a range of investment opportunities, from solar bonds to installing solar panels on your own property. However, challenges such as the reduction of government incentives and the lack of battery storage need to be addressed for the industry to continue to grow and thrive.