The UK Government’s announcement today regarding the introduction of a feed-in tariff for photovoltaic (PV) installations will kick-start the country’s PV market, predicts global analyst firm IMS Research.

According to IMS Research, photovoltaic (PV) installations in the UK have been extremely low to date, with the Government instead choosing to support nuclear and wind power to meet its commitment to increase supply from renewable sources. However, today’s announcement to pay up to 41.3 pence per kWh (€0.47) for systems up to 5 MW is anticipated to quickly stimulate demand for PV and establish a significant new market for PV suppliers.

Ash Sharma, Renewable Energy Research Director commented “the announcement presents an even higher feed-in rate than was originally proposed. This is likely to generate a significant PV market in the UK, though it will take some time to get traction due to the need for all installers to be registered under the scheme. The UK has similar irradiation levels as Germany and without a FIT just 5 MW of new PV power was installed in the UK in 2009. However, the introduction of this FIT could lead to 250 MW of new PV capacity being installed in 2011”. This compares with the 6000 MW of new PV capacity installed in Germany in the last three years.

Despite the relatively low irradiation levels in the UK, the recent falls in PV component prices coupled with the FIT’s reasonable payout levels could see a return on investment within 12 years. Given that the FIT offers wide support for most system types and is guaranteed for 25 years, significant investment in this sector now seems inevitable.