Solar power

The heat is on as soaring electricity bills boost demand for panels

‘It’s hot,” says Steve Springett, a director of the renewable energy brand Egg, cheerily assessing the solar market. “There are two key factors: people are understanding the environmental benefits of it better, and energy is really, really expensive at the moment.”

Consumer interest has increased in recent months as Britons hunt for ways to cut huge energy bills. A reduction in VAT on energyefficient systems from 5% to nothing this spring has added to the appeal of solar power.

Ebay searches for solar panels and solar power batteries increased by 54% and 134% respectively in June, compared with the same period last year. Murray Lambell, the general manager of eBay UK, says: “Many [consumers] are choosing green energy options as a solution that’s good for their wallet and the planet, and we’ve seen a significant surge in demand for products like solar panels and batteries as a result.”

The boom is the latest in an industry whose fortunes have been so unpredictable that it has been called the “solar coaster”, a name that emerged from peaks and troughs created by the government’s feed-in tariffs, through which householders received payments for the electricity generated by eligible systems to encourage their uptake.

A rush of installations took place on the eve of each deadline before payments would become less generous, followed by a fallow period. The scheme closed to new applicants in March 2019 and industry watchers say the market had become more stable since then – until this year.

Data from the consumer credit reporting company Experian shows that about 1.9m households intend to install solar panels or other renewable capabilities this year.

Springett says soaring energy bills could reduce the time it takes to recoup the cost of an installed system, coming down from “double-digit years” to more like seven, depending on the size and location of the property. Warranties usually last for 25 years and the panels – also known as photovoltaic

‘People are choosing green energy as a solution for their wallet and the planet’

Murray Lambell

cells – can last for up to 40 years. Costs typically vary from £5,000 to £15,000 for a family home.

“There’s a definite crossover between people who are getting solar panels, and electric cars and heat pumps. They want the whole package,” says Springett.

The clamour for panels is now so great that one senior industry executive says his company ran out of labour and materials to take new orders. “I tried to pass on inquiries to competitors to help out the customers, only to find out they didn’t have the capacity to help them either. A lot of the installers went back to their professions, like electricians, when the feed-in scheme ended, and it’s hard to get them back,” he says.

UK institutional investors have shown more interest in the industry recently. Shares in NextEnergy Solar Fund – which invests in large projects in the UK and Italy – have risen by 7% this year, valuing the London-listed company at £640m. In the US, however, tightening regulations, tough markets and concerns over rising interest rates have pummelled the stocks of industry giants including First Solar and Sunrun.

For businesses, rising electricity bills – along with labour costs – have made solar panels an attractive investment. Amazon today announced plans to introduce solar across all of its UK sites, and will have more than 30,000 new modular panels installed on its facilities by the end of the year.

The surge in consumer interest has highlighted difficulties in sourcing solar panels. A squeeze on global shipping capacity and freight rates since the pandemic has led to a shortage of inverters, devices that convert the current created by the panels to power the home.

The business secretary, Kwasi Kwarteng, has targeted a tripling in solar power by 2030, increasing capacity from 15 gigawatts now to 50GW. With more energy bill rises expected in October and again next year, consumers piling in this summer could well set Britain on its way towards hitting that target.