With the widespread reduction of first solar subsidies for commercial solar installations in June, and on August 27th, for domestic systems, the British government is trying to withdraw nearly 90% of support for solar panels. With domestic subsidies set to drop to a total of some 87% lower than at their induction 5 years ago, around 958,000 homes will no longer be able to afford solar panels at their current rates. June reductions to commercial subsidy rates have already seen a stall in applications for new solar farms in much of the country, while several solar farms have actually pulled out, and stopped construction, following the cuts. That aside, it’s not the end for the UK’s solar industry, although there could be a significant pause.


The UK is Well Ahead of Solar Goals


The State for Energy and Climate Change, headed by Amber Rudd, seems to be determined to reduce the solar budget, to save taxpayers as little as 33 pence to a few pounds a year, which will cost them in other ways, when they can’t afford installations. However, experts suggest it won’t be affecting the market for long, and that the cuts are for a reason. The most obvious of those reasons is that the UK adopted solar power far more quickly than anyone expected. With 625,000 homes installing solar panels since 2010, there are now more than 700,000 domestic solar installations in the UK, which collectively provide more power than the Drax power plant. The UK also installed more panels last year than any other European country, moving the country well ahead of it’s goals for solar production for 2015.


City and Community Funded Solar Is Still Moving Forward


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The Landmead 46MW solar farm in Abingdon, England Photograph: Peter Macdiarmid/Getty Images


With dozens of city and community projects in the works around the U.K., it’s safe to say that while the government seems to have given up on solar, the people haven’t. One example is Barnsley, who recently launched a program known as Energise Barnsley, which consists of a £10 solar panel project to install panels on 5,000 homes, which would make it the largest community owned solar scheme in the UK. The scheme should provide a 5% annual return to investors, providing the community finishes in time to qualify for the current subsidies.


Solar Panel Prices Are Still Dropping


While the UK will never be as productive of a place to install solar panels as a sunnier country like Saudi Arabia or Australia, it can still be profitable for homeowners and businesses, especially over the course of 25 years. With most solar panels providing returns in 7-10 years depending on location, homeowners can still earn a 15% return on solar panel investments. That aside, with falling costs, and an increasingly competitive market, the price of solar panels is set to continue dropping, which should allow more people to afford solar panels, even without the subsidies. While that won’t be happening in the next year, it will happen, especially with the combination of fewer sales and more availability of cheap solar manufacturers. Low-cost solar panels from China and other eastern countries are already hitting the market, and that spells good news for continuing the solar boom. The price of solar panels has dropped by nearly 60% in the last 5 years, and most experts predict another 40% in the next 5.
Essentially, even with a slight pause in commercial and domestic solar installations, solar power is likely to remain popular, and installations will continue to pick back up as the costs of installations drop.

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