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Microgeneration Market Report - UK 2013-2017 Analysis 

  • December 2013
  • -
  • AMA Research
  • -
  • 87 pages

AMA Research are pleased to announce the publication of the 1st Edition of the report “Microgeneration Market Report - UK 2013-2017 Analysis, focusing on those technologies certified by the Microgeneration Certification Scheme. Drawing together a wide range of sources, this report provides an integrated overview of recent growth and market prospects for power generation technologies up to 50 kWe and heat generating products up to 45 kWth.

Key issues covered in the report are:

Microgeneration technologies reviewed – solar photovoltaics, micro wind power, micro hydropower, solar thermal and biomass boilers & stoves. ground & air source heat pumps micro-CHP.
General overview of the renewable energy sector identifying key drivers for microgeneration– strategic and fiscal (e.g. Microgeneration Strategy, Renewable Energy Strategy, Energy Bill 2012 /Electricity Market Reform, Feed In Tariff (FIT), Renewable Heat Initiative (RHI), Renewables Obligation, Green Deal).
Recent market developments – impact of FIT, RHI etc on annual number of installations & capacity for installed for each micro technology.

The key area of interest is that the government intends for microgeneration to be a key element in the energy mix as the UK moves towards decentralized energy provision. Household take-up of microgeneration has been patchy and variable between technologies, reflecting many factors such as awareness, installation cost, subsidies, paybacks etc, with the launch of The Green Deal the most recent initiative to drive the market.

Of particular interest:

Market sizes and by installed capacities, numbers of installations and /or by generating output - for micro CHP, heat pumps, solar PV, solar thermal, micro & small wind turbines, micro hydropower and biomass boilers.
Assessment of impact of Feed -In Tariffs, Renewable Heat Incentive, Green Deal etc.
Evaluation of growth potential for these technologies.
Green Deal Plans Agreed – take-up in 2013 and beyond. Trends in domestic and non-domestic sectors.

Key areas covered in the report include:

OVERVIEW OF UK ENERGY SUPPLY
Overview of trends in UK energy supply 1995 - 2012 by technology type, impact of Large Combustion Plant Directive on infrastructure, potential energy generation mix. Overview of Renewable Energy and Microgeneration. Review of greenhouse gas emissions – trends by type and end-user source 1995 -2012
Review of government strategies and legislation – Renewable Energy Strategy, the Energy Bill & Electricity Market Reform, the Microgeneration Strategy.
Identification of key market drivers – Feed in Tariff, Renewable Heat Initiative, Renewables Obligation, Renewable Heat Premium Payment, Green Deal, Energy Performance Certification, Microgeneration Certification Scheme. Green Deal Plans agreed – Jan-Sep 2013
Overview of renewables in the UK energy mix – trends in overall electricity generation mix by fuel type 2006 to 2012. Trends within renewable energy mix by capacity and generation 2006 -2012. Market prospects to 2020.

REVIEW OF MICROGENERATION MARKETS

Overview of Microgeneration market - market size by technology, value and number of installations 2009-2013. Strengths and weaknesses of alternative technologies, drivers, size/trends in domestic / non-domestic applications etc
Solar photovoltaic panels – review of total PV market by capacity and output 2006-2012 and total installed capacity by incentive programme. Review of impact of Low Carbon Buildings Programme and Feed -In -Tariff on demand –market sizes by capacity and installation numbers. Market prospects with forecasts to 2020. Overview of supply.
Solar thermal – review of European market 2008–2012. View of UK market for micro solar thermal systems. Impact of Low Carbon Building Programme and Renewable Heat Incentive. Demand by end use sector by area installed. Market prospects to 2020. Overview of supply.
Micro hydropower - review of market by capacity and output under Low Carbon Buildings Programme and Feed-In–Tariff. Market sizes by capacity and installation numbers. Market size by capacity ranges. Overview of supply by types of operators and equipment suppliers.
Ground and air source heat pumps - review of UK market by trends in installation numbers. Impact of Low Carbon Building Programme and Renewable Heat Incentive. Mix by end use sector by area installed. Overview of supply.
Biomass boilers – market size, trends and drivers e.g. Low Carbon Building Programme, Renewable Heat Incentive etc. Market prospects. Overview of supply.
Micro Combined Heat & Power systems – review of impact of pilot Feed-In–Tariff. Market size by capacity and installation numbers. Market prospects. Overview of supply by types of operators and equipment suppliers..
Micro and small wind turbines – trends in micro wind turbines capacity & output 2005-2012, trends in small wind turbines capacity & output 2005-2012. Market prospects and key drivers e.g. General Permitted Development Orders .Overview of supply.

The Government has ambitious short term targets for microgeneration as a key component in the UK’s energy mix over the next decade and beyond. This is partly because most such technologies have relatively low levels of uptake, compared to mainland Europe, but offer significant potential, partly due to limits on capacity of larger renewable plants or, as with hydro-electric power, options for further growth are limited.

A key driver will be the shutting down of those remaining coal, gas and oil fired power stations by April 2015 that opted out of the Large Combustion Plant Directive. This will leave a significant shortfall in the UK’s power generating capacity.

In accordance with the Microgeneration Certification Scheme there are seven existing technologies eligible for support and also for payment under the FIT and RHI. These are power generating systems up to 50 kW - solar photovoltaics, micro windpower, micro hydropower and solar thermal up to 45 kWh; micro combined heat & power, biomass boilers, heat pumps (ground source and air source) and solar thermal.

After strong growth in the solar PV sector, up to 2011, the number of installations declined in 2012 and, based on comparative data for the first eight months of 2013 against 2012, installations are estimated to have fallen significantly in 2013. There were sharp falls in February, March and July 2013, possibly due to the decline in FIT payments from 40.83 p/kWh up to 3 March 2012 to 21.65 p/kWh for most of March 2012.

Solar PV is clearly the dominant technology with a massive uplift in demand in 2011/12, in contrast to the relatively low and slow market acceptance of micro CHP and Hydro technologies. With the exception of micro combined heat & power, these are mature technologies, widely used in many countries. However, the UK currently has one of the lowest penetration rates for all microgeneration technologies, lagging far behind not only Germany, Austria and Scandinavia, but also most southern European nations. Due to factors such as capital costs and climate change scepticism, the level of uptake among homeowners and small businesses has been restrained despite fiscal incentives such as the Low Carbon Buildings Programme.

However, with the introduction of financial incentive schemes - the Feed-In-Tariff and the non-domestic Renewable Heat Incentive - and the development of the Microgeneration Certification Scheme, there has been a sharp surge in the uptake of solar PV and to a lesser extent solar thermal. Also key to this has been the decline in average prices for PV panels, driven largely by the increasing market penetration of low-cost Chinese imports.

Based on installation data from the Microgeneration Certification scheme and average installation costs for each of the eligible technologies it is estimated the market accelerated from around £22m in 2009 to over £2 billion in 2012, mainly because of the impact of the FIT on the uptake of domestic retrofitted solar PV.

While the growth in the market may provide work opportunities for installers, most equipment in the UK is supplied from overseas, particularly wind turbines, solar PV and solar thermal arrays, biomass boilers and heat pumps. In the hydropower sector, there is a greater proportion of indigenous systems suppliers.

Table Of Contents

Microgeneration Market Report - UK 2013-2017 Analysis 
1. INTRODUCTION 8
1.1 BACKGROUND 8
1.2 SOURCES OF INFORMATION 8
2. SUMMARY 10
3. ECONOMIC ENVIRONMENT 13
3.1 GDP 13
3.2 INFLATION and INTEREST RATES 14
3.3 UNEMPLOYMENT 15
3.4 HOUSEHOLD CONSUMPTION 16
3.5 HOUSING and CONSTRUCTION 16
3.6 STERLING 18
3.7 POPULATION PROFILE 19
3.8 CONCLUSIONS 19
4. OVERVIEW OF UK ENERGY SUPPLY 21
4.1 CLIMATE CHANGE - GREENHOUSE GAS EMISSIONS OVERVIEW 21
4.2 UK ENERGY SUPPLY 22
5. OVERVIEW OF RENEWABLE ENERGY AND MICROGENERATION 27
5.1 DEFINITION 27
5.2 OVERVIEW OF MICROGENERATION MARKET SIZE 28
5.3 RENEWABLES STRATEGY AND LEGISLATION 30
5.3.1 Introduction 30
5.3.2 Renewable Energy Strategy (RES) 30
5.3.3 The Energy Bill 2012 and Electricity Market Reform 31
5.3.4 Government's Microgeneration Strategy 31
5.4 FINANCIAL MARKET DRIVERS 32
5.4.1 Renewables Obligation 32
5.4.2 Low Carbon Building Programme 32
5.4.3 Feed in Tariff (FIT) 34
5.4.4 Renewable Heat Premium Payment (RHPP) 35
5.4.5 Renewable Heat Incentive (RHI) 35
5.4.6 Other Key Drivers 37
5.5 RENEWABLES IN THE UK ELECTRICITY GENERATION MIX 40
5.6 RENEWABLE ENERGY SUPPLY PROSPECTS 42
6. MICRO AND SMALL WIND TURBINES 44
6.1 INTRODUCTION 44
6.2 RECENT DEVELOPMENTS 45
6.3 MARKET PROSPECTS 47
6.4 SUPPLY 48
7. PHOTOVOLTAIC SYSTEMS 49
7.1 INTRODUCTION 49
7.2 RECENT DEVELOPMENTS 49
7.2.1 Overview of Total Solar PV Market 49
7.2.2 Low Carbon Buildings Programme Overview and Renewables Obligation 52
7.2.3 Feed in Tariff Market 52
7.3 MARKET PROSPECTS 54
7.4 SUPPLY 56
8. SOLAR THERMAL 58
8.1 INTRODUCTION 58
8.2 RECENT DEVELOPMENTS 59
8.2.1 Overall Market for Solar Thermal Systems 59
8.2.2 Microgeneration Market for Solar Thermal Systems 60
8.3 MARKET PROSPECTS 63
9. BIOMASS 65
9.1 INTRODUCTION 65
9.2 RECENT DEVELOPMENTS 65
9.2.1 LCBP 65
9.2.2 RHPP and Non-domestic RHI 66
9.3 MARKET PROSPECTS 67
9.4 SUPPLIERS 68
10. GROUND AND AIR SOURCE HEAT PUMPS 70
10.1 INTRODUCTION 70
10.2 RECENT DEVELOPMENTS 71
10.3 MARKET PROSPECTS 74
10.4 SUPPLY 76
11. HYDROPOWER 77
11.1 INTRODUCTION 77
11.2 RECENT DEVELOPMENTS 77
11.2.1 Overview of Small Scale Hydropower 77
11.2.2 Micro Hydropower 78
11.3 MARKET PROSPECTS 80
11.4 SUPPLY 81
11.4.1 Developers and Operators 81
11.4.2 Equipment Supply 82
12. MICRO COMBINED HEAT AND POWER 83
12.1 INTRODUCTION 83
12.2 RECENT DEVELOPMENTS 84
12.3 MARKET PROSPECTS 85
12.4 SUPPLY 87TABLE 1 NUMBER OF MICROGENERATION TECHNOLOGIES INSTALLED 2009 -2013 - VOLUMES BY SOLAR PV, ASHP, GSHP, SOLAR THERMAL, BIOMASS, MICRO HYDRO, MICRO CHP, SMALL MICRO WIND 10
TABLE 2 GDP DATA - 2010-2013 - KEY CONSTITUENT ELEMENTS 13
CHART 3 INTEREST RATES AND INFLATION (CPI) FROM 1992-2017 15
CHART 4 PDI and SAVINGS RATIO AT CURRENT PRICES 1995-2017 16
TABLE 5 EXCHANGE RATE FLUCTUATIONS 2008-2014 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 18
CHART 6 GHG EMISSIONS BY TYPE1990-2012 21
CHART 7 NET CARBON DIOXIDE EMISSIONS BY SOURCE - RESIDENTIAL, INDUSTRIAL, TRANSPORT, WASTE MGT, POWER STATIONS ETC 1995-2012 22
CHART 8 FUEL INPUT FOR ELECTRICITY GENERATION BY MILLION TONNES OF OIL EQUIVALENT (TOE) 1991-2012 23
TABLE 9 MAIN POWER GENERATING PLANTS SCHEDULED FOR CLOSE OR MOTHBALLING - CAPACITY, FUEL, CLOSURE DATES 25
CHART 10 POSSIBLE FUTURE ENERGY GENERATION MIX BY FUEL TYPE 2020 (GAS, NUCLEAR, RENEWABLES, COAL, OTHERS) 26
TABLE 11 NUMBER OF MICROGENERATION TECHNOLOGIES INSTALLED 2009 -2013 - VOLUMES BY SOLAR PV, ASHP, GSHP, SOLAR THERMAL, BIOMASS, MICRO HYDRO, MICRO CHP, SMALL MICRO WIND 29
TABLE 12 MICROGENERATION TECHNOLOGIES - ESTIMATED MARKET VALUES AT INSTALLED PRICES (£'000S) 2009 -2013 29
TABLE 13 INSTALLATION OF MICROGENERATION TECHNOLOGIES UNDER THE LOW CARBON BUILDING PROGRAMME 2006 - 2010. NUMBER OF INSTALLATIONS BY TECHNOLOGY, COST, BUILDING TYPES, GRANT VALUES 33
TABLE 14 INSTALLATIONS OF MICROGENERATION TECHNOLOGIES UNDER THE RHPP - BY TECHNOLOGY, NUMBER OF REDEEMED VOUCHERS AND INSTALLED CAPACITY AT SEPTEMBER 2013 35
TABLE 15 ACCREDITED NON DOMESTIC RHI INSTALLATIONS BY TECHNOLOGY, NUMBER, CAPACITY AND HEAT GENERATED AS AT 30 SEPTEMBER 2013. 37
TABLE 16 GREEN DEAL - NUMBER OF ASSESSMENTS AND PLANS JAN-SEPT 2013 38
CHART 17 UK ELECTRICITY GENERATION BY FUEL TYPE (COAL, GAS, NUCLEAR, RENEWABLES AND OTHERS*) GWH 2006 -2012 40
TABLE 18 UK RENEWABLE ELECTRICITY GENERATION (GWH) - BY TECHNOLOGY (ONSHORE, OFFSHORE, PV, HYDRO, BIOENERGY, NON-BIODEGRADABLE WASTES) 2006 - 2012 41
TABLE 19 UK RENEWABLE ELECTRICITY CAPACITY (GW) - BY TECHNOLOGY 2008 - 2012 42
CHART 20 RENEWABLE ELECTRICITY GENERATION CAPACITY TERAWATT HOURS (TWH) - COMPARISONS 2006, 2012 and PROJECTED 2020 43
TABLE 21 SIZE RANGES FOR MICRO, SMALL and MEDIUM SIZE WIND TURBINES BY POWER RANGE, MAST HEIGHT AND ANNUAL OUTPUT 44
CHART 22 UK TRENDS IN MICRO WIND POWER CAPACITY (CHART 23 UK TRENDS IN SMALL WIND POWER CAPACITY (>1.5 - 15 MW) AND OUTPUT (GWH) 2005 - 2012 46
CHART 24 UK SOLAR PV INSTALLED CAPACITY (MW) AT JULY 2013 BY INCENTIVE PROGRAMME (FIT, RO, OTHERS) 50
CHART 25 TOTAL INSTALLED SOLAR PV CAPACITY (MW) and GENERATION (GWH) 2007 - 2012 51
CHART 26 NUMBER OF SOLAR PV SYSTEMS INSTALLED UNDER THE LCBP BY END USER (HOUSEHOLDERS, NOT-FOR-PROFIT, OTHERS) 52
CHART 27 UK FIT MARKET FOR SOLAR PV SYSTEMS UP TO 100 KW BY INSTALLED CAPACITY RANGE (KW) AND NO. OF INSTALLATIONS APRIL 2010 -MARCH 2013 53
CHART 28 FORECAST OF ANNUAL AND CUMULATIVE SOLAR PV INSTALLATIONS (? 4KW) BY VOLUME, GREAT BRITAIN 2012 -2020 55
TABLE 29 GLOBAL SUPPLY OF SOLAR PV COMPONENTS - BY PRODUCT AND REGION 56
CHART 30 UK DEMAND FOR SOLAR THERMAL COLLECTORS BY INSTALLED AREA BY TYPE (FLAT PLATE and VACUUM) 2012 58
TABLE 31 KEY EU27 + SWITZERLAND MARKETS FOR GLAZED COLLECTORS BY AREA INSTALLED (‘000 M²) 2008 - 2012 59
CHART 32 UK DEMAND FOR MICRO SOLAR THERMAL (UP TO 45 KWTH) - NUMBER OF INSTALLATIONS UNDER THE LOW CARBON BUILDINGS PROGRAMME AND THE MICROGENERATION CERTIFICATION SCHEME, 2006 -2013 61
CHART 33 UK MARKET FOR MICRO SOLAR THERMAL SYSTEMS (UP TO 45 KWTH) BY END USER SECTOR (PRIVATE HOUSING NEW BUILD, DOMESTIC RETROFIT, NON-DOMESTIC) BY AREA INSTALLED 2012 62
CHART 34 FORECAST OF ANNUAL AND CUMULATIVE SOLAR THERMAL INSTALLATIONS BY VOLUME, GREAT BRITAIN 2012 -2020 63
CHART 35 LCBP DEMAND FOR WOOD FUELLED BOILER SYSTEMS BY NUMBERS INSTALLED (PRIVATE, COMMERCIAL, NOT FOR PROFIT) 2006 - 2010 66
CHART 36 NON-DOMESTIC RHI INSTALLATIONS - TOTAL HEAT GENERATION (GWH) UNDER THE SCHEME AS AT 30 SEPTEMBER 2013 66
CHART 37 BOILER SALES MIX BY TYPE OF FUEL (GAS-FIRED, OIL-FIRED, ELECTRIC, ETC.) - BY VOLUME 2011 67
CHART 38 UK MARKET ESTIMATES FOR HEAT PUMPS BY NUMBER OF UNITS INSTALLED 2005 - 2012 72
CHART 39 AVERAGE ANNUAL DEMAND FOR GROUND SOURCE HEAT PUMPS BY END USERS (HOUSING, COMMERCIAL, INDUSTRIAL ETC) - BY NUMBER OF INSTALLATIONS 73
CHART 40 INSTALLATIONS OF HEAT PUMPS UNDER THE LCBP 2006 -2010 (DOMESTIC, COMMERCIAL, NOT FOR PROFIT) 74
CHART 41 TOTAL INSTALLED SMALL SCALE HYDROPOWER CAPACITY (MW) and GENERATION (GWH) 2006 - 2012 78
TABLE 42 UK FIT MARKET FOR MICRO HYDROPOWER BY ANNUAL CAPACITY and NUMBER INSTALLED 2010/11 - 2012/13 79
TABLE 43 UK MICRO HYDROPOWER CAPACITY BREAKDOWN BY CAPACITY BAND (KW) 80
CHART 44 UK MICRO HYDROPOWER BY OPERATOR TYPES BY NUMBER OF INSTALLATIONS 81

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