The UK solar industry is continuing to grow sustainably in a zero-subsidy environment. With a new capacity of 175MWp-dc in the 3 months to 31 March 2021. This was controlled by large solar farms that contribute 70% of the quarterly capacity deployed.
The UK government removed any incentives, so more than 1GWp-dc of subsidy-free solar PV capacity can be installed, marking a landmark moment for the sector. The increasing solar PV capacity installed in the UK is now above 14GWp-dc, of which the subsidy-free part makes up about 7.5%.
The rooftop segments are now operating in a strong-growth and sustained mode, with residential and commercial rooftop installations up 14% each year.
In the last year up to 31 March 2021, the UK installed 660MWp-dc of new solar photovoltaic cells (PV), setting the year 2021 up nicely for the GW level. Potentially marking the year as the most significant yet for this sector.
Solar Farms dominates forecasts but phasing of builds uncertain
This year the photovoltaic industry is likely to see more than 190GW of new capacity, more than 80% of this coming from ground-mounted solar farms. Rooftop segments are now a small part of the huge solar industry.
Last year, six solar farms with a capacity above 40MWp-dc have been completed, with the largest solar farm (75MWp-dc) finished and has officially been announced by its owners a few weeks ago. This trend of announcing sites after the event is becoming a normality in UK solar industry. Two of these large-scale solar farms haven’t done any marketing for owners/builders/suppliers as if secret operations were the order of the day.
Large-scale solar farms will continue to control the UK solar industry for the next decade, at the 80%-plus capacity level. Fuelling this is an expanding pipeline of new site projects added every month. More than 800MW per month average has been added by way of new sites during the past year, with most of these at pre-application stages.
The outlook for 2021 remains at the GW-level of new solar PV capacity added in the UK. The deciding factor is completely out of the hands of anyone in the UK. But is purely a function of raw material supply, availability to serve the global sector during the year.
More than 95% of solar panels are produced of solar cells made from wafers, the bulk material. These wafers are sliced from ingots pulled from chunks of polysilicon. The problem right now lies purely in how much polysilicon can be supplied to the ingot pulling fabs in China. Today, 99% of ingots are pulled from factories in China.
During 2019 and 2020, half a dozen loss-making polysilicon producers exited the industry. Then, in the middle of 2020, various natural disasters in China took the bulk of the Chinese polysilicon capacity offline. Overall, leading to a shortage of polysilicon. Therefore, the polysilicon suppliers put prices up. Polysilicon now costs about twice that of 12 months ago.
In addition, during the second half of 2020, there was a shortfall of glass in China. The polysilicon tightness, linked with the glass supply shortage, had the twin effect of adding 15-20% to module prices. This situation has continued since the start of the year, although the glass shortage has now eased off. However, the lack of polysilicon continues to be a problem.
Within China, there are 3-4 large polysilicon plants that are in construction. The understanding a few months ago was that they would add to supply capacity at the start of 2022. However, there is a massive drive (not unexpectedly) to bring forward production dates well into 2021. If this happens, then module pricing may well start to ease downwards.
Ultimately, this may be the one factor that determines if the UK installs south of 1GW during 2021 (possibly in the 850-900MW range) or exceeds 1GW (as high as 1.5GW) if a second half and year-end blitz of new building unfold.