Solar News

Tuesday 09 March 2010

Dr Petri Konttinen said the mechanisms for re-evaluating feed-in tariffs are too slow and reactive, leading to feast or famine tendencies that damage the long-term sustainability of the industry

Prospectors rushing into the solar market to take advantage of short-term profits could damage the long-term sustainability of the UK solar power industry, according to an energy consultant at metal and manufacturing company Luvata.

Ahead of next month's introduction of Feed-in Tariffs, Dr Petri Konttinen said that a more responsive regulation of the tariffs was needed to protect against the volatility seen in the Spanish and German solar electricity markets over the last two years, which have had a "profoundly negative" effect on the global industry.

According to Isleworth-based Luvata, the German solar industry has predicted a 44% reduction in the price paid by utilities for solar energy generated with photovoltaic panels if the government goes ahead with its proposed feed-in tariff rate cuts.

A year ago, Germany saw falls in the cost of raw materials and the ensuing over-supply of solar panels contributed to a 25-30% reduction in the price of building a solar farm, Dr Konttinen claimed.

But with no equivalent reduction in the feed-in tariff, the market suddenly promised huge returns for anyone opening a solar farm before the end of last year, which Dr Konttinen said caused a huge influx of speculators generating solar power.

He predicted that these short spurts of growth would be likely to lead to long periods of stagnation and called for a more flexible regulatory structure for the UK solar industry that reacted quicker to changes in the market to protect it against a similar boom and bust situation.

He said: "We need a more responsive approach to feed-in tariffs and agreement on how we support and develop a sustainable solar energy industry. If the triggers to re-evaluate feed-in tariffs continue to be on a reactive basis instead of proactive, the feast or famine tendencies will continue."

Dr Konttinen said that the government must use the knowledge already in the industry to create a new framework that would negate future "drastic steps," such as those taken by the German government.

"Governments need to work together with the photovoltaic industry to create a framework which can use real time indicators such as the number of people investing in solar panels, purchase and installation costs, supply and demand, and the amount of energy feeding into the system to adapt the tariffs according to the current state of the market.

"This will help prevent the necessity for drastic steps to be taken to adjust to the huge market shifts that have already had a profoundly negative effect on the industry."