Solar ready to compete with fossil fuel alternatives, says Lightsource CEO

The solar industry is looking at an “extremely positive landscape” over the next five years despite recent cuts to government support, according to Nick Boyle of Lightsource.

Speaking this morning at Solar Media’s Solar Finance and Investment event, the chief executive claimed the UK industry now stands in a better position than it did five years ago due to changes in electricity pricing.

“The negatives when we were raising money five years ago were what if the government decide to stop paying the feed-in tariff? The reason why there was a fear the government wouldn’t pay the 33p was because you could buy the electricity for 6 or 7p. That's not the case today; that risk is no longer there because the individuals that are buying electricity off us are doing it because it’s cheaper than the other technologies that are vying for their business.

“That is the change and the thing that turns this industry on its head and puts us in the perfect position to completely change the way people contract to buy electricity going forward.”

With work on subsidy-free projects already underway, Boyle believes the viability of solar as an alternative to fossil fuel power providers is now a reality.

"The fact that solar is now at grid parity if you're hard-wired into the electricity users brings into question the other investments that we've been competing with. Who in their right mind is going to invest in a 50-year gas pipeline or a large oil-fired power station now?

“The fact that solar is now able to undercut those, and the price continues to drop so it's only going to get worse, says to me that there are a significant number of financial institutions that are saying gas and other fossil fuel technologies are not the sure thing that they were before and that maybe we should look at other technologies that have got this future-proofing.”

Boyle also claimed that due to this new found viability of solar when tied to a power purchase agreement (PPA), the technology can also vie for opportunities in infrastructure. He argued that as risks associated with other forms of generation become more prevalent – changes in electricity price, transport and delivery costs etc. – the predictable returns offered by solar are now far more attractive.

“Infrastructure investments are about the securitisation of cash flow,” he explained. “The thing about solar is the sun comes up today and it comes up tomorrow so the supply of our feed stock is guaranteed. We also know how much we’re going to produce – 2% deviation from the norm year-on-year. So for 25 years we know within 2% what the production is going to be.

“The ability to know that electricity is there is every bit as valuable as the price of the electricity itself and what we are able to bring is price and supply security."

He added that the this picture will be strengthened further by the growth of battery technology, which he believes will combine with solar to provide base load technology at a price that can compete with alternatives already in the market.

He explained: “Batteries, if they're priced properly and projected forward for the term of the solar, are a viable option because they're able to say to an entity we can supply all of your electricity needs rather than just the stuff that we're able to produce while the sun shines so it’s a natural progression.

“From my perspective, I think it's a complete game-changer.”

Boyle was speaking on the first day of the Solar Finance and Investment event, which is taking place at the Grange City Hotel in London until Wednesday.