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Toyota Solar Panel Array at its vehicle plant in Derbyshire, where Auris Hybrid, Auris and Avensis cars are built. Photo: Toyota UK via Flickr.
Toyota Solar Panel Array at its vehicle plant in Derbyshire, where Auris Hybrid, Auris and Avensis cars are built. Photo: Toyota UK via Flickr.
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Government reforms will 'probably kill stand-alone solar PV in the UK'

Chris Goodall

17th May 2014

By publishing its 'reform' proposals for the support of large scale solar PV in two separate documents on the same day, the Government managed to conceal its true intent from the industry, writes Chris Goodall. The truth is much worse than anyone realised.

Solar PV will be entering a very crowded Dutch auction against better positioned competitors.

This week the government announced the abrupt end of the current subsidy scheme for large scale solar PV farms.

From early 2015, no PV installation above 5 MW will be entitled to payments under the Renewable Obligation (RO).

The industry was understandably upset but assumed that the next scheme (called Contracts for Difference) would simply replace the RO.

The CFD is a more cumbersome and bureaucratic scheme that would impose extra cost and hassle on the relatively small scale generators that operate in the sector. So far, so bad.

And that's how the story was reported in The Ecologist (see 'Government attacks UK's big solar') - as a negative, unwelcome and unnecessary move, but not a catastrophic one.

But it is just that - the sudden death of an industry

This seems to be very much the wrong impression. Another DECC document, put out on the same day as the subsidy withdrawal, makes clear that under the new scheme, starting in late 2014, solar will have to fight onshore wind and other cheaper technologies for budget.

A limited pot will be made available in October for all 'mature technologies' such as wind, energy from waste, PV, sewage gas - and, controversially, field-scale solar. These are all grouped together in 'Group 1' and a solar development will only win funds if it bids for a lower subsidy than these considerably more mature alternatives.

I contacted DECC and it confirmed this. "Technologies in group 1 will have to compete with each other. This will require projects in those technologies (to) submit bids, which will be assessed on the basis of price."

In effect, this probably kills stand-alone solar PV in the UK. Although solar has rapidly come down in price, well-located wind farms are likely to be able to substantially underbid solar PV for the subsidy funds.

The funds will be tightly restricted

Furthermore, indications are that the pot available in late 2014 and beyond for these more mature technologies will be very small.

This is partly because one of the few renewable technologies the Government actually seems to like, offshore wind, is also very expensive, at about double the cost of onshore wind.

Offshore wind, placed in 'Group 2' as a less mature technology, will therefore need very much higher levels of subsidy and will quickly swallow up much of the available budget.

So farm-scale solar PV will be entering a very crowded Dutch auction against better positioned competitors. Perhaps some new PV farms on the south coast will able to match other technologies but the odds of success are not great.

DECC acknowledges the precarious position of stand-alone solar. "Solar costs and support are currently higher than other (mature) technologies" competing for money, says the Department.

Officials - and presumably Government ministers - seem happy to see farm-scale PV in the UK die. Their rationale is that solar is being rapidly rolled out elsewhere in the world - so the UK can piggy-back on the cost reductions achieved in other countries which will "occur largely independently of what the UK does."

An extraordinary success story - until now

Although DECC says that solar PV will be the "first large-scale renewable technology to be able to deploy without financial support at some point in the mid-to-late 2020s", it thinks that the UK should play no part in this global effort to develop the technology and reduce its cost.

Instead, DECC suggests, the country should play a more aggressive role in developing PV built into roofs and other surfaces, even though these are always likely to be more costly than field solar. Until, that is, Henry Snaith and his colleagues at Oxford PV start painting buildings.

But even this sector will be constrained by 'capacity triggers' that the industry denounces as restructive. These work by cutting the level of subsidy paid to generators as successive installation volumes are completed, and so create risk and uncertainty for investors and developers.

It has to said that there is some logic in the new DECC stance on farm scale solar - however destructive the policy is going to be. But a more obvious response to the unexpected growth of large scale PV (to government, if not to the industry) would be to reduce the subsidy to perhaps £50 or even £40 a megawatt hour.

And most of us would prefer these policy decisions to be made more explicitly, with more consideration given to the companies struggling to compete in what has been an extraordinary success story. The UK was going to be the largest PV market in Europe this year.

 


 

Chris Goodall is an expert on energy, environment and climate change. He blogs at Carbon Commentary where this article was first published.

 

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