Large Scale Solar UK: NPD Solarbuzz UK solar PV perspectives – part two

In part one of the summary of my recent talk at Kelham Hall, I gave an overview on the global and European PV market in 2014, with some historic perspectives on other European PV markets that had not managed to sustain initial growth rates. The article also highlighted the fact that the UK is forecast to be the largest PV market in Europe during 2014.

In part two, the focus is firmly on the pipeline of large-scale ground-mount projects in the UK at the end of April 2014. The blog also helps explain what a pipeline means and the significance of it, as this is often misunderstood in terms of short-term demand forecasting.

At the end of March 2014, the UK had installed just over 4.5GW of solar PV. More than 99% of this capacity has been installed since 1 January 2010. Approximately 97% has been installed since 1 April 2011. This equates to a 12-quarter average of 365MW to the end of March 2014.

The first quarter spikes from the ROC degression phases can be seen clearly in the graphic below.

Figure 1: Cumulative installed PV in the UK passed through the 4.5GW mark at the end of March 2014, stimulated by the 1.1GW installed during the first quarter of the year.

Looking now in detail at the make-up of the capacity installed at the time of the presentation last week, the figure below shows the split of installed PV capacity, taking into account the capacity installed in the first three weeks of April 2014.

Contributions from the ground-mount segments (here split into below and above 5MW) are almost half of the cumulative capacity installed: a particularly humbling statistic given the aspirations within the Department of Energy and Climate Change’s (DECC) Solar Strategy plans. This also highlights the ability of large-scale solar farms (in particular above 5MW) to be implemented quickly, compared to amassing the equivalent number of rooftop installations that would sum up to the capacity of a large-scale solar farm.

Figure 2: Ground-mount PV is approaching the 50% level in the UK, in terms of installed capacity. The large building-mount (BM) segments represent one of the goals of DECC’s long-term strategy for UK solar PV.

Before looking at the pipeline for large-scale PV projects in the UK, it is important to understand what has happened up to the end of April 2014. A total of 363 ground-mounted solar farms (defined in the graphic as >250kW) have been completed. The full breakdown is shown in the figure below.

The new trend – stimulated by ROC levels – is for larger projects above 10MW. At the end of April, there were 48 completed solar farms in the range 10-20MW with 11 at a capacity greater than 20MW.

Getting an accurate benchmark for installed PV capacity is essential in any country developing PV capacity. While some PV supporters advocate the silent approach to successful deployment, history informs us that governments tend to react with greater severity the larger the surprise when numbers are finally counted!

Therefore, in terms of assessing the impact of any pipeline, this figure of 363 should be considered carefully, along with the 4.5GW cumulative deployment covering all rooftop and ground-mount systems.

Figure 3: Almost 60 solar farms with capacity above 10MW have been completed in the UK by the end of April 2014, reflecting the success of the ROC scheme for the solar PV industry.

Pipelines are essential to understand, in terms of forecasting large-scale PV deployment. But, as with any data, defining the status of the underlying projects is equally pertinent. Citing any pipeline project count and capacity has to be tempered with the risk status of the projects in question.

The figure below shows the pipeline of projects from the NPD Solarbuzz UK Deal Tracker report, at the end of April 2014. Filtering on ‘>250kW‘ and on ‘ground-mount’ (to remove the large-scale rooftop projects), and removing project entries that are tagged as Withdrawn, Rejected or Pending Site Selection, leaves us with 462 projects.

Next, let’s remove the projects under construction right now, and this figure falls to 446. Within this sub-segment of prospects, 137 have planning application granted, 152 are awaiting planning decision and 157 are pending planning application (at public consultation stages, having environmental impact assessments undertaken, etc.).

Figure 4: The project pipeline for ground-mounted solar projects in the UK at >250kW, at end April 2014.

Transitioning pipelines into forecasts then feeds in lots of other variables, including the project developer in question, the status of financing, grid interconnection availability and so on. Each project has its own subset of issues that will determine whether it is likely to be completed, and if so, when.

People often get spooked by project pipelines, but here is a benchmark that I often provide in getting a handle of near-term deployment versus pipeline activity. In 2014, the US market is likely to be something in the range of 6GW. However, the pipeline of non-residential projects is greater than 50GW.

Ask any sales guy what the total prospects adds up to in an opportunity list, and then ask how much is forecast to get booked over the next 12 months. There will be a large delta! In the same way that sales people filter on opportunity-stage or probability, project pipelines come to life when these type of filters are added also.

Filtering the uncompleted project pipeline from the current database for the NPD Solarbuzz UK Deal Tracker, with project status ≥40% (all 100% projects are of course in the past, as they are done), and looking only at Q2’14 to Q4’14 (effectively now May to December 2014 period), and we get 180 projects at a total of 1.44GW.

If planning applications in the UK were frozen right now, this list of 180 projects becomes the top priority for anyone wishing to benefit out of UK solar farm deployment until the end of the calendar year. Of course, many factors still come into play, but are beyond the scope of this quick pipeline overview based on the talk in Nottingham last week.

Finally, as a closing comment on the UK’s ground-mounted solar PV opportunity in 2014, the figure below shows some of the 2014 ground-mounted solar PV capacity contributions at the country level, pro-rated to the largest ground-mounted PV market this year, China.

There are two key takeaways here. First, the UK is forecast to be the third largest market in 2014 for ground-mounted capacity added. Second, the contributions from mainland Europe are very low, something that goes a long way to explaining why so many suppliers and EPCs have set up camp in the UK over the past 12 months, and why global developers such as SunEdison have become so vocal on the opportunity that the UK represents in Europe.

Figure 5: The importance of the UK market for project developers and EPCs could not be illustrated more graphically here. The UK is forecast to be the third largest country for ground-mounted solar PV in 2014, with only China and the US deploying more PV capacity on the ground.

The development of the UK ground-mount sector in the UK has been incredible over the past few years, not just from a deployed capacity perspective, but also in the creation of a secondary market in which solar farms are traded as an established asset class. The latter point differentiates the UK from many of the previous solar growth phases in mainland Europe and ensures that government policies and targets are monitored carefully by a broad range of stakeholders.

With ongoing discussions within the UK government on what will happen to ROC levels for ground-mounted solar PV in the UK beyond 1 April 2015, the focus has turned firmly on what will happen between now and 31 March 2015. If solar farm project lists were important just ten days ago, their value has just gone up a few more notches!