Britain Has Installed Too Much Solar Power Too Early

Posted: Dec 21 2013, 6:16am CST | by , in News


That Britain currently has half a million households with solar panels is hailed as some great victory: I insist that it’s a disaster. That in the next couple of years a further half million will be installed is said to be good news: I think it’s a second disaster. The difference here is that the boosters of green tech are looking at the amount installed. I am instead looking at the costs, both past and future, of installation. But by installing so much, too early, of an immature technology we have simple increased the costs to ourselves:

Half a million UK homes will have solar panels installed on their roofs by the end of this year, official figures show – while the industry claims that figure could double within two years. Government data show that 495,459 solar panels had been installed, the vast majority on homes, by Sunday, since a programme of subsidies began in 2010. At the current rate of installation, of more than 2,800 panels a week, the half a million milestone will be passed by the end of the year, equating to about two per cent of UK households. The Solar Trade Association says it wants to reach one million installations in 2015.

Think through this for a moment. We’re repeatedly told that solar PV is grid comparable (that is, it costs about the same, all told, as getting coal fired power through the normal electricity grid) in certain places and for certain functions right now. I have no doubt at all that this is true. We’re also told that it will be only another year or three before solar PV is grid compatible all the time and in all places. I tend to doubt that in at cloudy place like Britain but let’s accept what it is that we are being told.

Excellent: so what is the optimum strategy here? Clearly, it is to wait until solar PV is indeed grid comparable and then we’ll all install it without the need for any urging. Nor, more importantly the need for any subsidy. But that’s not actually what is being done and that’s why the current strategy is such a waste of economic resources.

For what is being done right now, and has been for the past few years, is that we are deliberately installing an inefficient technology. And we are paying people 25 years of subsidies (those feed in tariffs) to do so. We’re deliberately encouraging people to use a technology that costs more than the value of its output: that is, we are deliberately making everyone poorer.

The one possible justification for such a policy would be that the subsidy and the subsequent installations are what is making solar PV cheaper. I’m afraid that I don’t believe this for two reasons: solar PV has been getting steadily cheaper for decades. A subsidy program that has been running only a couple of years isn’t going to change that cost reduction curve. And secondly, even if it really is true that subsidies have lowered prices that isn’t the same thing as saying that British subsidies have lowered prices. For it’s a global industry and at least so far as I know there is no manufacture of the solar cells themselves in the UK. The local price is entirely driven by whatever the global price is.

And even if we accept that the global price has been driven down by subsidy (I don’t, I think it’s just the continuation of that general reduction in price over time) then that global price has been driven down by global subsidy. That global subsidy being dominated by Germany, the USA, China and Spain in recent years. Whatever Britain has done has had a minimal to no effect.

So, we’ve been coughing up this subsidy when we didn’t have to. We could have just sat tight and waited until solar PV is indeed grid comparable, as we’re continually told it’s about to be, and saved ourselves all that subsidy. And that, I insist, is a grave mistake, that we did not do that.

To try to put it simply: If people install solar PV today then we will be paying them twice the normal price of electricity for the next 25 years. If people install solar PV in two or three years time then we will be paying them the normal price of electricity for the next 25 years. Electricity derived from solar panels in 2017 will cost, in 2027, half what electricity derived from panels installed in 2014 will.

So why on Earth are we encouraging people to install panels in 2014 rather than wait until 2017? And it’s most unlikely that we’ll all look back in 2027 and be thankful for how much extra we’ve all got to pay for our electricity for having moved too soon.

Source: Forbes

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