Slim pickings for solar in UK renewables auction

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Just five solar projects totalling 72MW have won contracts in a UK government auction in which PV competed with other renewable energy technologies for the first time.

The Department for Energy and Climate Change this morning unveiled the 27 winning projects in the first contracts for difference (CfD) auction, under which the most competitive bids receive 15-year contracts at a guaranteed ‘strike price’.

For UK solar projects over 5MW, CfDs will be the only form of support available after 31 March this year, following a government decision to limit the renewable obligation (RO) mechanism to projects under this size. The RO has been largely responsible for the UK’s recent boom in large-scale solar and helped make it Europe's largest solar end market last year.

In total contracts for over 2GW of renewable energy capacity were awarded in the CfD auction, with offshore wind the biggest winner with 1.1GW.

Solar was directly competing with onshore wind in the 'established' pool in the auction. In the pool of 'less etablished' technologies were offshore wind, energy from waste and advanced conversion technology.

The five solar successful projects ranged from 12 to nearly 20MW in size. Details are as follows:

Project name Developer MW Strike price (£/MWh) Delivery year
Wick Farm Solar Park Hadstone Energy  19.1 50 2015-16
Charity Farm Lightsource 14.67 79.23 2016-17
Royston Solar Farm Royston Solar Farm Ltd 13.78 50 2015-16
Netley Landfill Solar REG Netley Solar 12 79.23 2016-17
Triangle Farm Solar Park Cambridgeshire County Council 12 79.23 2016-17

Two of the projects bid by some margin the lowest strike price of any of the successful bidders in the auction, of £50/MWh. This is significantly less than the strike price of £92.50 promised by the government to French firm EDF for power from a new nuclear plant at Hinkley Point. The average strike price for all projects in the auction was around £85.75.

Ray Noble, solar consultant to the UK’s Renewable Energy Association (REA) welcomed the fact that solar had shown it could compete.

“No one knows how many projects were submitted of each technology so it is difficult to analyse but it looks like solar is giving a warning to the others for Round 2 [of CfDs] with the lowest strike price of £50,” he said.

But doubts are already being raised about the possibility of £50/MWh solar being viable in the UK with the Solar Trade Association (STA) saying it would be “amazed” if those projects could be built.

“As we warned, solar has only been able to win a tiny amount of CfD contracts. This is very disappointing,” said STA CEO Paul Barwell. “The soon-to-be-cheapest and most popular renewable – solar power – has lost out in a complex auction that really suits big players. We are expecting a considerable drop in the solar market this year. It's really important that changes are made to the next round of CfD auctioning in October to ensure SMEs can compete – and that energy policy generally takes better care of the UK solar industry. We're not asking for special treatment, just a more level playing field.”

UK energy secretary Ed Davey said: “This world leading auction has delivered contracts for renewables projects right across the UK. These projects could power 1.4 million homes, create thousands of green jobs and give a massive boost to home-grown energy while reducing our reliance on volatile foreign markets.

“The auction has driven down prices and secured the best possible deal for this new clean, green energy.”

The full list of winning projects is available here.

Additional reporting by John Parnell and Peter Bennett

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