After a challenging 2022, with the Ukraine-Russia war and its energy crisis causing a bump up in prices for solar hardware and installation labour, there is now positive news for homeowners who are considering investing in solar panels and battery installations in their homes: solar installation prices are expected to come down.
“I have been closely monitoring the trends in the solar industry for many years. This spring we could see the most affordable residential solar in two years. This is great news for the renewable energy industry and for the people who want to contribute to a sustainable future”, says Andreas Thorsheim, founder and CEO of Otovo Solar, the solar energy platform where several hundred European installer companies price their equipment and labour every week.
For solar energy, steep price declines is the norm. From 2000 to 2021, the prices for solar modules fell by about 90%. From 2015 to 2020 alone, solar module prices fell by 45%.
The overall positive long term trend was interrupted in 2022. When energy prices shot up in the autumn of 2021, demand quickly outgrew supply. By January 2022 every single pair of hands in the solar installation business was booked for months ahead. Labour prices in the industry shot up. By April of the same year, pretty much every European warehouse was emptied of modules and inverters. Equipment prices quickly followed the installer labour’s upward trend. But this past winter the situation changed.
“I am happy to say that we are now returning to a downward trend, and we expect the cost of solar installations to come down abruptly in the middle of 2023”, says Thorsheim.
Having launched in the UK earlier this year, Otovo expects installation prices to fall by as much as an additional 7% for British households. VAT on residential solar systems in the UK is currently set at 0% and therefore the average cost of an installation (£5,000-6,000), is set to drop further – the solar cost curve making now an opportune time to invest.
The price drop forecast closely follows news that solar installations in the UK have reached a seven year high in the first months of the year, per figures from standards organisation MCS (Otovo working exclusively with MCS-accredited installers).
Jina Kwon, Otovo UK and Ireland GM comments: “The solar cost curve is massively weighed in the favour of UK consumers right now. VAT on residential systems is set to 0% and Otovo predicts that
installation costs will fall by as much as 7% in coming months. Industry bottlenecks have cleared so the time between booking and having panels on your roof is drastically reduced.”
In addition, Otovo is set to launch its successful leasing model in the UK later this year (pending regulatory approval), thus making residential solar systems even more accessible to a wider pool of consumers.
Kumi Thiruchelvam, an Otovo customer who lives in South-East England, said: “I obtained several quotes along with Otovo and the sales person gave me confidence that Otovo was the right installer for me. I had consistent responses throughout the process and any questions were promptly answered. I felt like I had the best of both worlds in having a strong technical installation team on my roof, and a strong technical team in the office giving them support.”
Moreover, the electricity prices consumers now face are substantially higher than last time solar installations were this affordable, meaning that payback times could hit record lows in many places as soon as in May or June this year.
