In several previous posts, we’ve discussed the challenges facing solar panel manufacturers due to both declining panel prices and the uncertainties of government subsidies (usually in the form of feed in tariffs, or above market rates paid for excess solar power supplied to the electrical grid). They are not unrelated issues: as cheaper solar panels become available, more people install them, which leads to greater than expected demand for the subsidies. Given the current state of economies around the world, these subsidies are coming under increasing pressure.
The latest example of this interaction comes from the UK which has offered generous feed in tariffs for installers of small (<4kW) solar panel systems.
As the price for panels has dropped……installed capacity of Solar PV has accelerated resulting in demand for subsidies above original projections…
Requiring a reduction in subsidies and sending the industry into another “bust”:
As highlighted recently in The Guardian article on this subject, solar PV installations have dropped nearly 90% since the government halved the subsidy offered for solar power on April 1st.
This lack of consistent policy is one of the major factors affecting development throughout the alternative energy industry. Policies (mandates, subsidies, etc) which are adjusted as administrations change, or even year to year as economic conditions dictate, make it very difficult to attract investment capital or create long term business plans.