Has DECC finally solved the solar puzzle?

In many ways the UK solar industry will be happy to see the back of 2012. Continuing with the trend that developed in 2011, 2012 was dominated by political uncertainty over support for solar in the UK. Fast-track reviews, legal challenges, reference dates, consultations and RO banding reviews all loomed large over industry.

The policy uncertainty perpetuated the boom and bust cycles in the market and undoubtedly damaged consumer confidence in the technology.

But then a funny thing started to happen.

The Department of Energy and Climate Change (DECC) began to reach out and start a meaningful dialogue with industry. Government rhetoric about supporting the solar industry started to materialise as solid policy.

Fitting the pieces together

The ugly saga over feed-in tariff rates for solar cast a long shadow over both DECC and the solar market. In order to gain some control over the costs associated with the feed-in tariff scheme, DECC introduced a new tri-monthly degression mechanism for the feed-in tariff. The new system sees the available feed-in tariff rate fall in line with the level of capacity installed by the market.

The tail end of 2012 was dominated by the consultation over what RO rate large-scale solar would receive. DECC proposed slashing the rate from 2ROCs down to 1.5ROCs. After a long (and apparently meaningful) consultation, DECC upped the available rate to 1.6ROCs, as well as introducing a new rate for roof-mounted solar to help restimulate the sluggish 250kW-5MW market. DECC also outlined the glide path for solar’s support right up to 2017.

The result? Solar developers in the UK now have long-term certainty over what support rates projects will receive from government. What’s more, the structure of the RO and FiT schemes means that DECC will be able to take a hands-off approach to the market, putting a stop to the fast-track interventionist measures that rocked industry over the last year.

Large-scale solar developers have certainty over the RO rate all the way until 2017, providing the clarity and stability that investors in such large-scale projects crave. Installations supported under the feed-in tariff scheme have a degression mechanism that is transparent, methodical and predictable. This allows companies to accurately estimate what FiT rates a project can expect to receive and plan accordingly. In addition, government is committed to supporting the feed-in tariff scheme until at least the end of the current budget (FY 2014-15).

The final piece of the puzzle  

The publication of the updated Renewable Energy Roadmap has confirmed that government now views solar in the UK as a key technology in its quest to meet our 2020 renewable energy targets.

The roadmap predicts that between 7GW-20GW of solar capacity could be installed in the UK by 2020. As a result, DECC will be publishing a dedicated solar strategy this year to outline the role solar can play in the UK as well as what DECC can do to identify and remove barriers to deployment for the technology.

The move marks a step-change in attitude towards solar from DECC. It appears that within the walls of Whitehall Place, solar is no longer considered a nuisance but a viable technology in the quest to decarbonise the UK’s electricity supply.    

Where to next?

After lobbying vigorously for the last 18 months, solar now has the stable policy foundations that it requires to build for the future.

Despite the difficult market conditions in the UK last year, the cost of installing solar continued to drop dramatically. Not only is solar the most popular form of renewable generation amongst the British public but it is now one of the most affordable. Coupled with new, stable policy platforms, solar is in the perfect position to prove that it is no longer a fringe player in the UK energy market.

Here’s to a great 2013.