The department of energy and climate change (DECC) is set to announce a review into the level of support offered to large-scale solar through the Renewable Obligation scheme, with a number of industry figures bracing themselves for the news.
While a reduction is not the only outcome of a review, it would tally with the recent Solar Strategy document which appeared to realign its preference for PV developments from ground-mounted to smaller, mid-sized rooftop arrays.
In March, energy minister Michael Fallon said in a written answer to parliament that no changes were planned.
“There is no further comprehensive banding review planned for the Renewables Obligation (RO) scheme before it closes to new generation on 31 March 2017,” he said.
Ben Cosh, founder and managing director of solar developer TGC Renewables warned that while a well-planned reduction in support would be hard to argue with, a surprise cut could spook investors.
“Knee-jerk policy does nothing for investor confidence. It drives up the cost of capital for the more risky parts of the value chain ie pre-accreditation, and makes it impossible to build any momentum in driving costs out of supply chains across all scales of solar and across all technologies,” said Cosh.
“Solar is already cheaper than most other low carbon technologies. From HM Treasury’s perspective, the fact that the unpublished LCF [levy control framework] budget is being used up by ROC-able solar faster than anticipated should be celebrated. Solar achieves the 2020 renewable targets at a lower cost to consumers,” he added.
Nick Boyle, CEO of Lightsource Renewable Energy said it was “inconceivable” that changes to the RO would be made.
“The UK solar industry should be congratulated for its outstanding achievements in the first quarter of 2014 , but instead we find ourselves having to justify our very existence,” said Boyle.
“We simply fail to understand why we continue to be dealt with as second class citizens in comparison to offshore wind , nuclear and laterally the current flavour of the month of the fracking of natural gas,” he said.
“When is the UK government going to fully wake up to the potential of solar and stop jumping from rate cut to rate cut in a myopic race to the bottom on pricing.
“Quality solar installations are an asset to Britain and should be held up as a beacon of home grown electricity generation , but constant tariff cuts and government pressure act to undermine the excellent work we do and put into serious question the very momentum we have worked so hard to build,” added Boyle.
Despite the changes being sign-posted in the solar strategy, the news remains unwelcome to the industry at a time when the UK industry was enjoying a boom, partially because of the increasing policy certainty.
“After the recent welcome launch of the Solar Strategy taking the UK solar industry through to 2020, once again solar is being hit with a sudden knee jerk consultation,” said Ray Noble, a co-chair of DECC’s Solar Strategy and PV specialist at the Solar Trade Association (STA).
“So despite ministers saying, only a few months ago, there would be no more changes to RO until it ends in 2017, which in itself provided the industry with much needed stability to satisfy the funding institutions, the solar roller coaster continues,” he added.
“The industry delivered over 4.5GW of Solar in three years and with a further 6GW in the pipeline to be delivered over the next two years, you would think ministers would praise the industry. Having driven down the cost of solar to the point where it delivers electricity 30% cheaper than offshore wind and to the point where electricity is needed avoiding grid losses, common sense looks to be not in this governments vocabulary, it smells a lot of politics,” added Noble.
Additional reporting by Peter Bennett.