Brexit’s Aftermath: Navigating Challenges and Opportunities for the UK’s Solar Industry
Currently, the United Kingdom is experiencing a significant shift in its economy and society. The Brexit referendum on June 23, 2016, resulted in a majority of Britons opting to leave the European Union (EU), marking the beginning of a new chapter for the UK in global affairs. For supporters of Brexit, this move signifies restoring London’s sovereignty, free from the perceived overregulation and bureaucracy of Brussels.
Conversely, to those who opposed Brexit, the UK’s exit is seen as a potential disaster for the country’s economy and its influence within the international community, as it loses its official role in Europe’s most formidable institution. Regardless of one’s stance, the departure from the EU has major ramifications for the UK’s solar and broader renewable energy industries.
### The Journey to Brexit
To understand the current and future landscape of the UK’s solar industry, it’s crucial to reflect on the developments since the Brexit referendum, as these pivotal moments shape its current state.
Although the 2016 vote to leave the EU was a narrow majority—52% in favor of Brexit, 48% against—the significant economic and geopolitical consequences promised by Brexit prompted many Britons, including politicians and citizens, to call for the Parliament to either block Brexit altogether or hold a second referendum.
These appeals intensified over the years due to ongoing economic turbulence and the inability of Prime Minister Theresa May’s government to secure a majority for a Brexit deal in Parliament. Nevertheless, Brexit was enacted on January 31, 2020. Still, smooth sailing is far from guaranteed, with 2020 presenting considerable challenges for the British government.
### Milestones of the Year
After leading the Conservative Party to a substantial electoral victory in December 2019, UK Prime Minister Boris Johnson’s government secured a Brexit deal passed by Parliament, officially leaving the EU on January 31, 2020. A “transition period” lasting until December 31, 2020, ensures that trade and continental engagement continue largely unchanged, although the UK has lost its voting rights in the EU.
During this transitional phase, the UK and EU aim to solidify a new trade agreement to govern future interactions. It is anticipated that a UK-EU summit in June could conclude with a finalized trade deal, assuming both sides reach a consensus. Failing an agreement or extension of talks, a “no-deal” Brexit might result.
In this event, the UK would default to World Trade Organisation rules for trading with the EU. Some advocates view this as the ideal outcome, but many economists warn that it could severely harm the UK’s trade and logistics infrastructure. A November 2018 report by the UK’s National Audit Office projected a surge in customs declarations from 55 million annually to 260 million if no deal materializes.
### Impact on the UK Solar Industry
With this backdrop, we can better understand the impact on the UK solar sector, both past and present, and anticipate future developments.
The notable conclusion of recent years is the prolonged instability caused by the drawn-out Brexit process. Regardless of whether one supports or opposes Brexit, the uncertainty’s negative impact on the UK economy is undeniable. Even with Brexit’s clarity, years of uncertainty lie ahead.
### Current Status of UK Solar
In evaluating Brexit’s effect on the solar industry, one must acknowledge that the UK isn’t synonymous with sunshine—quite the contrary. While cities like Manchester, Cardiff, and Glasgow are known for rain, the UK isn’t as rainy as perceived, ranking as the 70th rainiest nation globally. Despite its geographic challenges, the UK’s solar endeavors are commendable, with significant public support for solar and renewable energy.
### Transition Era
In June 2019, the UK enacted a law targeting net-zero emissions by 2050. By 2019, the UK had already reduced emissions by over 43% from 1990 levels. Notably, emissions in 2018 were 2.5% lower than in 2017, demonstrating the growing momentum behind sustainable technologies and policies in both public and private sectors.
Despite these advances, the future for UK solar remains complex. Even with a favorable deal striking between the UK and EU, the UK will navigate an unfamiliar landscape, with expectations it will take until at least the mid-2020s to approach normalcy. While the British public has supported solar adoption, the industry has faced setbacks. By 2016, around 800,000 homes had solar installations, and 2018 surveys indicated widespread interest. However, the Imperial College London target of 10 million homes by 2020 remains unfulfilled, with just over 1 million installations currently estimated.
The Feed-in Tariff scheme, which ended in March 2019, was replaced by the Smart Export Guarantee (SEG) from January 2020. While SEG offers some returns for energy fed back into the grid, it doesn’t match the certainty of its predecessor, leaving many hesitant to invest in solar without strong assurances on return on investment.
### Looking Ahead
With many Brexit uncertainties now resolved, the UK solar industry stands resilient. Still, unresolved issues could significantly impact the sector. In case of a no-deal Brexit, UK businesses will face increased paperwork and financial challenges as the country exits the EU VAT and customs union.
The solar industry’s fate may also suffer from political missteps, such as the proposed VAT hike on solar battery systems. Criticism from the Renewable Energy Association highlighted this move as contradictory to government climate commitments, revealing Brexit is not the sole hurdle for solar growth.
Furthermore, the future of UK solar may face challenges from competing priorities, such as Scotland’s leadership in wind energy, provided Scotland remains in the UK.
### Embracing New Trade Opportunities
Even if a trade deal with the EU is finalized, it will likely not afford the UK the same economic benefits previously enjoyed. Brexit proponents argue the UK can pursue free trade agreements globally, but it is crucial to remember the competitive landscape has changed since the UK last negotiated such deals independently.
As countries like Canada and Australia have diversified their trade partnerships, forging new alliances will be complex for the UK. The world has evolved since the UK joined the European Economic Community in 1973. Future growth is anticipated in Asia, Africa, and Latin America, potentially surpassing Europe’s largest economies. This shift could provide an opportunity for the solar sector to thrive, especially if a “no-deal” Brexit fuels domestic solar installations as households seek energy security amidst instability.
### Conclusion
Even without the Brexit uncertainty, 2020’s challenges were amplified by the outbreak of COVID-19, which disrupted supply chains and impacted many industries, including solar. Some businesses, less reliant on Chinese panels, might not face the same disruptions, but consumer spending patterns are likely to change.
As Brexit proceeds, the best move for the solar industry would be a swift, orderly exit, allowing a return to policies fostering growth. With an end to the long wait, the industry can regain momentum and continue its contribution to a sustainable future.
Share your thoughts on the current state of the UK solar industry and the long-term effects of Brexit in the comments below.