UK government announces solar review with large scale solar targeted for change
As expected the Department of Energy & Climate Change (DECC) have announced proposed changes to the array of subsidies and policies for renewable energy in the UK. The thrust of the proposed changes for the solar industry are to reduce support for large scale ground mounted solar arrays in favour of roof tops. This is in line with government discussions over the last few months and is not the terrible event for the solar industry that some sectors of the industry and media are trying to make out.
The DECC announcement states the proposed changes include splitting the current "˜degression band' for projects over 50kW under the Feed In Tariffs scheme (FITs) into two: one for standalone, one for non-standalone. In other words, tariffs for building-mounted solar panels would reduce at a slower rate than for ground-mounted solar panels, so giving rooftop-mounted schemes access to more of the financial support available through FITs.
Since 2010 the UK's renewable electricity capacity has doubled; in the same period, over £34 billion of private sector investment has been announced, with the potential to support almost 37,000 jobs. What's more, the scale of growth in the sector has meant that the cost of some renewable technologies, such as onshore wind and solar power, has fallen.
Solar photovoltaic (PV) is an important part of the UK's energy mix: there is currently 2.7 GW of PV capacity in the UK "“ enough to power 620,000 homes "“ placing the UK firmly in the global top 10 economies for solar power. This progress is ecpectedto continue, up to a projected deployment of between 10-12GW by 2020.
DECC published the Solar Strategy only a month ago setting out the actions that Government is taking in partnership with industry to ensure that the solar sector continues to grow. It included a focus on deploying more solar panels on the top of industrial and public sector buildings "“ a part of the sector that had been deploying at lower levels than we expected.
The Solar Strategy highlighted that Government was considering the implications of current deployment trends on the budget available for financial incentives to solar PV under the Renewables Obligation (RO) and would consult on any proposals for amendment. Large-scale solar is deploying much faster than expected. Industry projections indicate that, by 2017, there could be more solar deployed than is affordable "“ more than the 2.4-4GW set out in the electricity market reform (EMR) delivery plan.
The changes are occurring as the government attempts to manage financial expectations from the support programmes. With such fast growth comes greater costs than expected. Another part under review is a proposal to close the RO to new solar PV capacity above 5MW from 1st April 2015, across England, Wales and Scotland. Those proposals include grace period arrangements to protect developers who have already made significant financial commitments.
The intention is to keep the RO open for projects under 5MW which are not eligible for the new Contracts for Difference (CfDs). Projects above 5MW will be able to apply for CfDs "“ part of our world-leading Electricity Market Reform Programme that is marking further progress in its publications today.
There will also be a review of community benefits from ownership of renewables projects. The possiblity of increasing the maximum capacity for community anaerobic digestion, hydro onshore wind and solar PV projects from 5MW to 10MW under the FITs scheme is on the table. Also whether more can be done to allow grants to be combined with FITs payments for community projects up to 5MW. This delivers on two commitments in the Community Energy Strategy "“ published earlier this year.
Robert Goss, MD Conergy UK (who participated on DECC's Solar Strategy taskforce), had a more reasoned response to the proposals than some industry watchers and said, "Let's wait on the results of the consultation, but DECC's proposals are more of a gradual recalibration than an earthquake for British solar. Rather than disappearing overnight, we'd just select projects in different ways.
Many large solar farms would continue to be built under the CFDs but the trend towards smaller sites, which are politically more attractive, offers encouragement for projects that have been neglected in recent months.
The wider trend towards on-site power generation and consumption, which is Europe-wide and technology-specific, will take place with or without government intervention.
There are hundreds of thousands of acres of roofs that currently go unused in Britain, on office buildings, factories, warehouses and hospitals, and where the opportunities are huge for solar to cut customers' energy bills, and to reduce demands on the grid."
