UK government confirms large-scale solar support to 2019

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The UK government has set revised strike prices for large-scale solar under its new 'Contracts for Difference’ (CfD) renewables support system that will come into effect from next year.

Although reports earlier today had suggested solar support would be in for swingeing cuts, the final prices are in fact more than industry representatives had been asking for.

The strike price is the fixed price that generators of low carbon energy from technologies such as solar can expect to receive for the energy they generate over a period of time. The CfD system will come into effect next year, although it will overlap with the existing Renewables Obligation Certificate (ROC) programme under which large-scale solar currently receives support, which will run until 2017.

The strike prices announced today for large-scale solar differ only marginally from those published in draft by the government in June, only around £5 less each year than previously stated.

The strike price for onshore wind has been the most significantly reduced, a move observers said was designed to head off growing opposition to the technology among the Conservative Party’s right wing.

But the strike prices for solar between 2016 and 2019 are in fact more than industry body the Solar Trade Association had said were necessary, given the rapidly decreasing costs of building large-scale PV plants.

Earlier this year the STA said that if set higher in its early years, the strike price for large-scale PV could come down faster from 2015 to as low as £91/MWh (US$148.9) by 2018, reflecting solar’s decreasing costs.

This trajectory would have made PV cheaper by 2018 than the strike price the government recently agreed for the new nuclear capacity planned at Hinkley Point.

Year

Draft strike price (published in June)

Confirmed strike price (December 2013)

2015/16

£125/MWh

£120/MWh

2016/17

£120/MWh

£115/MWh

2017/18

£115/MWh

£110/MWh

2018/19

£100/MWh

£100/MWh

Writing on Twitter, Seb Berry, head of public affairs at UK-based PV developer, Solarcentury, pointed out by setting a higher strike price than the solar industry had said was needed from 2015, the government had missed the opportunity of having two renewable energy technologies that are effectively cheaper than nuclear by 2018, referring to the newly cut support for onshore wind. “Bizarre outcome,” he said.

Paul Barwell, chief executive of the Solar Trade Association, added: “We are disappointed with the strike price in the early years as it is far below the levels we asked for. The transition from ROCs to CfDs requires the higher levels we suggested, particularly when this is an untried and new mechanism. The published levels are lower than what is needed, so we now have to focus on fixing the variables in the mechanism to make it work for solar. That will be a significant task.”

Barwell added: “What is bizarre is that DECC has ignored our request for lower strike prices in the later years. We have provided up to date deployment costs, which are far more accurate than DECC’s existing data. Why give us more than we asked for? Is there an underlying concern that we will be the lowest cost low-carbon technology by 2019?”

UK energy secretary Ed Davey said the strike prices would give energy investors a “sound, sustainable and long-term basis to invest in renewable energy” in the UK.

“Investors are queuing up to express their interest in these contracts. This shows that we are providing the certainty they need, our reforms are working and we are delivering ahead of schedule and to plan.”

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