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Beijing has ended generous subsidies for solar manufacturers, which is driving up the cost of installs in the UK
Solar panel installations are costing hundreds of pounds more than they did at the start of this year due to a change in China’s export policy and the war in Iran, which has driven up the cost of materials.
The cost of solar panels has fallen sharply in recent years, but UK installers are warning that the era of ever-declining prices is coming to an end.
One national installer of solar panels said they were forced to charge customers an average of £800 extra, bringing the average cost of a solar panel and battery install close to £11,000.
The main reason behind the increase in solar panel prices is a change in the Chinese Government’s export policy.
At least 80 per cent of the solar panels in the UK are imported from China or contain components made there.
China has invested heavily in renewable energy manufacturing and is now the global leader in technologies such as solar panels, lithium-ion batteries, and electric vehicles.
For the past 20 years, solar manufacturers in China have been able to claim tax rebates of up to 13 per cent on the panels they export.
However, the cost of solar panels has dropped to unsustainably low levels in China, prompting the Chinese Government to take action to reduce the prospect of a situation where production capacity exceeds demand.
Last month, the Chinese Government abolished the tax rebate on solar panels, and a similar rebate for batteries is being phased out and will be fully removed next year.
At the same time, the war in Iran is driving up shipping and freight costs.
Lloyd Greenfield, founder of Glow Green, a national solar installer based in Bournemouth, said the wind-down of China’s tax benefits and the increased cost of shipping have had a “compounding effect” that has “caused installations to go up by around £800 on average” over the past two months.
“We also expect those prices to keep continuing to increase,” he said, advising those considering solar to act now.
Solar installers across the country are warning customers that the prices of panels and batteries in the UK have bottomed out and are now expected to rise for the rest of this year.
Greenfield said it was “sad” that prices were rising at a time when demand for solar is increasing due to rising energy bills.
“It’s still a really good investment to buy. The average payback we’re seeing is still typically six years,” he said.
Dave Rice, CEO of Segen, one of the UK’s largest wholesale distributors of solar panels, said the equipment has become 10-15 per cent more expensive in recent months, but noted that panels are still significantly cheaper than they were two years ago.
He also said the impact of price rises should not be too severe on consumers, as the equipment is only around a fifth of the total cost of an install, with labour costs far more significant.
Despite the current price hike, Rice predicted the price of solar installations would continue to fall in the long term.
“The whole industry is maturing… as scale starts to improve, I think the cost will continue to come down,” he said.
Greenfield and Rice both said the current price rises have exposed how the UK is overreliant on China for the green transition.
“To hit these Net Zero targets, we have to import these high volumes of panels, but we’re dependent on China controlling the prices and now removing taxes and global conflicts that are going to cause shipping costs to go up,” Greenfield said.
“How do we make it easier for the UK to be a bit more self-sufficient here?” he added.
Rice said overreliance on China was a “risk area” for the industry and that “having more places to purchase products and more diversity in that way will only strengthen the industry”.
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