Government must be clear on added costs of excluding solar from CfDs, says CCC

  • Solar.

    Amber Rudd has previously said there are "no plans" for solar to be included in future CfD rounds, all but excluding the technology from the process. Image: Mongoose Energy.

The government must be clear on how much extra it will cost to decarbonise the energy sector if it excludes solar from any future Contracts for Difference (CfD) rounds, the Committee on Climate Change (CCC) has said.

Speaking to Solar Power Portal Mike Thompson, head of carbon budgets at the CCC, said that while it is fully within the government’s remit to decide which technologies it supports through subsidy, they must be transparent about the additional costs incurred by backing more expensive generators.

The CfD scheme has been dogged by delays and its future appears far from certain in the wake of subsidy cuts designed to curb a purported overspend within the Levy Control Framework.

Earlier this month energy secretary Amber Rudd revealed that there are currently “no plans” for solar to be included in future CfD rounds, all but confirming the technology’s exclusion from three allocations that could occur over the next four years.

During the same parliamentary session energy minister Andrea Leadsom did however hint that a subsidy-free alternative scheme could be introduced in the coming months but stopped short of specifically including solar PV, instead mentioning onshore wind.

Thompson maintained the CCC’s stance of technology neutrality, but said that any additional costs incurred by supporting more expensive technologies could not be attributed solely to the cost of carbon budgets. “If you're not going to support the cheaper technologies then you need to be clear the extra cost you're putting onto the system,” Thompson said.

The CCC’s fifth carbon budget, released earlier this year and due to be legislated for in the coming months, calls for power generation to be 75% derived from renewables, nuclear and CCS by 2030 to meet a target energy intensity of 100g of CO2 per MWh. The budget also calls for solar generation capacity to fall between 20 and 40GW with utility-scale solar farms expected to be amongst the cheapest generators by that time.

This, Thompson said, would imply that any future subsidy-free CfDs should include solar due to it being cost-effective.

“The pressure for us would be that if the government is not going to offer any subsidy-free CfDs for onshore wind and for solar, it will need to explain how much more expensive the strategy is without those and we won't accept them saying this is a cost of carbon budgets, when it's a cost of a decision to support specific technologies,” he added.

Central to this will be the forthcoming carbon plan, which will comprise the policies the government intends to enact in order to meet the fourth and fifth carbon budgets. The plan is currently being worked on and is due to be unveiled by the government before the end of the year.

“What we need to see in that is an extension of the funding envelope – the Levy Control Framework – extending that beyond 2020 to give visibility of the future market and probably for the established technologies… What we're talking about is having a bit more certainty, a bit more long-term visibility,” Thompson said.

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