UK government deals blow to large-scale solar sector

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The UK Department of Energy and Climate Change (DECC) has confirmed that it is planning to remove support for solar under the Renewable Obligation (RO) scheme from 1 April 2015.

In a consultation published today, DECC has outlined plans to entirely remove solar support under the RO for developments over 5MW in 2015/16.

The UK is set to become the largest market in Europe this year. The latest forecast by NPD Solarbuzz estimates that the 2.875GW of solar capacity will be installed in the UK in 2014.

The consultation document states that the government “considers it necessary to take action to control the costs of large-scale solar PV to ensure it is affordable in the context of the RO and the Electricity Market Reform (EMR)”.

The government notes that solar projects over 5MW will be able to apply for support under the Contracts for Difference (CfD) auctions, which will begin in October 2014. However, the industry has expressed serious reservations about solar’s classification as a mature technology and investors have been cool on the shorter, 15-year period of the CfD scheme.

Paul Barwell, CEO of the UK Solar Trade Association (STA) said the move would slow down the rate that the cost of solar has been falling.

“The industry will be alarmed by these proposals and surprised to be singled out for harsh treatment. It does look like the government is seeking to define the energy mix and hiding behind the false excuse of ‘budget management’.

“DECC challenged us to work with communities to ensure solar remained popular as the large-scale sector developed, and we’ve done just that,” he said. “Today’s proposals are no just reward. If these proposals go through they will knock the industry’s extraordinary progress back, and actually reduce healthy competition in the renewables sector.”

In an attempt to help protect developers who have made significant financial commitments, DECC is also consulting on proposals to offer grace periods for those projects which qualify on or before 13 May 2014 –  the date on which the consultation begins.

In addition to removing support for ground-mount solar over 5MW, the government is also consulting on proposals to extend the degression period for roof-mounted solar under the feed-in tariff – a market that DECC has targeted as critical in the UK’s Solar Strategy.

The department notes: “In order to support rooftop deployment, we are consulting today on splitting the current ‘degression band’ for projects over 50kW under 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.”

Despite the threat of RO support being removed completely in April 2015, the large-scale solar sector in UK is predicted to become Europe’s largest in 2014, with some analysts predicting that the planned ROC closure for >5MW could trigger as much as 4GW of solar farms to be installed from now until April 2015.

DECC is consulting on the proposals over the next four weeks, closing 7 July 2014. The full consultation document can be read here.

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