Zombies and Solar Panels – the Solar Contagion Effect
November 23, 2012|
It’s April 2010, and little does the UK public know it, but the UK is about to become victim to a solar panel invasion with the side-effects of decreased global warming and increased free energy. With just 27MW of installed capacity by the end of 2009, this had shot up 285% by the end of 2010. However, the effects don’t stop there, as solar panels were only just starting to take off. The figure then increased from 77MW of total installed capacity in 2010 up to a mighty 1014MW over the next 12 months – an increase of over 1,300%!
Why Such a Rapid Growth?
The way that solar panels became popular is that the UK government introduced the ‘Feed in Tariff’. This is a scheme which pays monthly to homeowners with solar panels based on how much electricity their systems generate. Any excess electricity which their panels generate, but which isn’t used by the homeowner is automatically sold back to the main grid at a higher rate. Therefore, whilst a solar panel grant intuitively seems simpler, the Feed in Tariff rewards homeowners in the long run; systems take a few years to pay off, and then earn significant profits because the scheme runs for 25 years from the installation date.
However, what the government didn’t anticipate, was that the price of solar panels would tumble dramatically. The government figure showed a 30% decrease in the price of an installed system over the first 18 months of the scheme. This meant that the Feed in Tariff became lucrative as an investment, with homeowners able to recoup the system cost in just 5 years and being entitled to a further 20 years of regular payments! Clearly, this was a major part of why they became so popular, and it has now been adjusted in-line with the price decrease to keep the percentage returns under control.
Why Mention Zombies Then?
Admittedly, it’s a bit of a stretch of the imagination; a joint study by the New York University and Yale in the USA had some interesting results, finding solar panels were contagious: “We found that there is a positive, statistically significant, causal effect of previous nearby installations on a household’s decision to adopt solar panels,” said Bryan Bollinger, Assistant Professor of Marketing at N.Y.U. “A one percent increase in the zip code installed base leads to approximately a one percent increase in the zip code adoption rate.”
This is just taking overall areas into account – whilst seeing solar panels in ever-increasing numbers as you’re driving through the areas near to your house has a definite causal effect, the power of this on a street-by-street basis is even greater. The same study showed that “in an average California street with at least one solar installation, a one percent increase in the street’s installed base leads to a more than nine percent increase in the street-level adoption rate”. Statistically, if 10% of the street suddenly get solar panels, then the rest will -on average- all get them too! Ok, this may be extrapolating somewhat, but the point is clear – they spread about as fast as a zombie invasion, more or less.
Interestingly, this correlation was found to be even stronger for those households with longer commutes and of a large size, potentially indicating those with larger salaries are more likely to copy their neighbours. Does this mean that “keeping up with the Joneses” is greater amongst richer households, or is it a sign of the fact that present schemes are biased towards wealthier families – something for which the Feed in Tariff has received heavy criticism? It’s difficult to draw a conclusion, and it’d be interesting to see the correlation between differences in income and domestic solar uptake. The schemes in the area of the study – California – broadly mirror those in the UK.
So, maybe the next time you hear the government celebrate the success of the Feed in Tariff, now you’ll have a bit more knowledge as to how the first few systems getting installed have each potentially led to this spiralling upwards effect in the installed capacity of the UK. The most exciting effect overall of the Feed in Tariff, however, is that it has driven down solar prices so much that a system which cost £15,000 or more in 2010 now costs about £5,500, through increased competition and an improved manufacturing process caused by the increased demand for the product. This means that this form of renewable energy is steadily becoming more affordable for every day households, and hope is high that solar panels will one day reach grid parity in the UK.