What you need to know

Deployment of residential solar PV has plummeted since 2015, when installations peaked at 523MW. In contrast, just 92MW of residential solar PV capacity was deployed in 2019. The significant drop in deployments since 2015 reflects cuts to the Feed-in-Tariffs scheme in 2016 and the closure of the scheme altogether in April 2019.

COVID-19 has disrupted solar PV deployment between March and May 2020, but solar PV installs have since returned to pre-COVID-19 levels. A protracted economic recovery and rising unemployment would exert a downward pressure on solar PV demand in the residential and commercial sectors in the short and medium term.

While conditions in the UK solar PV market are set to remain challenging, MBD anticipates sustained annual growth in solar PV installations over the next five years. Further cost reductions in solar technology, co-location with increasingly cheaper storage and a rise in PPA-backed projects are set to be the key drivers for future solar PV deployment.

In the residential sector, the increased take-up of electric vehicles is expected to drive the solar-plus-storage market in the medium to longer term, as the combination of EVs and batteries can boost the economics of rooftop solar.

In the commercial solar PV market, the more widespread adoption of corporate “net zero carbon” strategies should help drive solar PV deployment.

Key issues covered in this Report

  • The impact of COVID-19 on the UK solar panels market in the short, medium and long term

  • How the market has performed over the last five years

  • Key drivers for domestic roof-top, commercial and large-scale, ground-mounted solar PV deployment

  • Key market trends across the solar panels market

  • How the market is expected to develop over the next five years

Covered in this Report

For the purposes of this Report, Mintel has used the following definitions:

The Report covers three main markets for solar PV in the UK: domestic, building-mounted (commercial and non-domestic buildings) and ground-mounted (also referred to as large-scale or utility-scale).

Solar power is the conversion of sunlight into electricity, either directly using photovoltaics (PV) or indirectly using concentrated solar power (CSP). Concentrated solar power systems use lenses or mirrors and tracking systems to focus a large area of sunlight into a small beam. Photovoltaics convert light into electric current using the photoelectric effect. As of 2019, there are no CSP plants in the UK and none announced, with the market monopolised by photovoltaics.

PV cells are made from layers of semi-conducting material, usually silicon. When light shines on the cell it creates an electric field across the layers. The stronger the sunshine, the more electricity is produced. Groups of cells are mounted together in panels or modules which can be mounted on a roof.

The power of a PV cell is measured in kilowatts peak (kWp), the rate at which it generates energy at peak performance in full direct sunlight during the summer. PV cells come in a variety of shapes and sizes. Most PV systems are made up of panels that fit on top of an existing roof, but solar tiles are also available.

Solar tiles are designed to be used in place of ordinary roof tiles. A system made up of solar tiles will typically cost around double an equivalent panel system, though there is a further saving on roof tiles or slates. Solar tile systems are not normally as cost-effective as panel systems, and are usually only considered where panels are not appropriate for aesthetic or planning reasons.

COVID-19: Market context

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential stores on 20th March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23rd March. Initially, a three-week timeframe was put on the measures, which was extended in mid-April for another three weeks.

The Health Protections Regulations 2020 came into effect on 15th June allowing the reopening of all non-essential stores in England, as well as the mandatory use of face coverings on public transport. Pubs, restaurants, hotels and hairdressers were able to reopen on 4th July, with many beauty businesses following on 13th July.

From 24 July, it became mandatory to wear face coverings in shops and supermarkets.

On 14 September, new laws prohibiting social gatherings of more than six people came into effect in England. It means that - apart from a set of limited exemptions including work and education settings - any social gatherings of more than six people will be against the law.

From Friday 18th September 2020, it became mandatory for certain businesses to have a system to collect NHS Test and Trace data and keep this for 21 days. Core COVID-19 Secure requirements also became mandated for hospitality businesses and egregious breaches enforced.

On 21st September 2020, the UK's COVID-19 Alert Level was raised from Level 3 (substantial risk, general circulation) to Level 4 (severe risk, high transmission) following the agreement of all four chief medical officers.

From 22nd September 2020, employees were advised to work from home where possible. Prime Minister Boris Johnson said the new restriction could last six months.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021.

The current uncertainty, however, means there is wide variation on the range of forecasts, which is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

We are working on the assumption that a vaccine will be available by mid-2021, but that there will be continued disruption to both domestic and global markets for some time after.

Although many offices had re-opened by the end of August, most had a reduced capacity, and working from home was still widespread. Although it seems likely that there will be a steady drift back to office-based working, we expect there to be a long-term shift in working practices. This will lead to a shift in demand for energy, with greater daytime consumption for domestic users.

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