What happened to the RO announcement?

It has been 50 days since DECC closed its consultation over proposals to slash the available Renewable Obligation (RO) rate for large-scale solar to 1.5 ROCs. Yet it appears that industry is still no closer to knowing what the RO rate will be from 1 April, 2013 to 31 March, 2017.

Solar Power Portal had heard from various sources that the announcement over the RO banding was due to be released in late November, but then it was pushed back to the first week of December. However, news has begun to filter through that this will no longer be the case. When contacted, DECC told us that the announcement will be made ‘shortly’.

The delayed announcement directly undermines the Prime Minister and Chancellor’s promise that renewables have a “very clear and stable framework” following the publication of the Energy Bill.  

The continued postponement of the announcement raises two distinctly different viewpoints; is the delay a positive sign that serious consideration of industry’s responses are happening? Or is the delay a further symptom of the incompetence that has continually plagued the solar industry?

The sunny outlook

The 22GW by 2020 ambition was not just an attention-grabbing sound bite that was pedalled out by the Minister to appease industry after DECC had been held accountable by the Supreme Court for its ‘legally flawed’ cuts to the feed-in tariff scheme. Far from rhetoric, DECC genuinely wants to see solar achieve that milestone. After all, solar can be deployed extremely quickly (far quicker than nuclear plants), has achieved an incredible 70% cost reduction in the last year, is immensely popular with the public, can be deployed on out of sight rooftops/brownfield sites; and is predicted by the IPCC to be the biggest generator of electricity in the world by 2050. All of the points outlined above combine to make solar a no-brainer for the department to back.

As a result, DECC has listened to industry’s concerns and is working out how best to support the technology going forward. Perhaps the delay is due to DECC modelling the impact of setting the RO rate at 1.8ROCs – a level suggested appropriate by the majority of industry.

More importantly, DECC could be revisiting the largest feed-in tariff (FiT) band (250kW-5MW) which has seen a virtual standstill in installations since the FiT rate was reduced to 7.1p in July. Many prominent industry players have been calling on DECC to include a way to restimulate this faltering market. A popular suggestion is to include two different RO rates for ground-mounted and roof-mounted solar. The latter would be greater than the former to reflect the higher costs involved in such projects and would help solar developers begin installing significant solar arrays at scale across suitable commercial locations.

The benefit of which is threefold: large commercial sites tend to be large electrical consumers; a solar array will significantly reduce demand from the grid, cutting carbon and reducing overall electricity demand. Electricity generated on site at large commercial properties can be consumed onsite, reducing the amount of electricity wasted through transmission losses. The electricity demands of large commercial properties tend to match the output of solar closely, as the majority will experience peak demand during working hours.   

Or is the sun setting?

The delayed RO announcement is another symptom of the systematic scaling back of ambition for solar in the UK. Every time that industry begins to ramp up and start to perform at scale, DECC has intervened and caused industry to crash.

The department will say that all cuts and restrictions put in place were necessary to preserve solar from consuming a disproportionate amount of the ‘budget’ set aside –allowing solar to grow so rapidly would place undue costs on consumers who fund the support schemes through subsidies on their bills.

However, the more cynical solar players will view the systematic strangulation of solar as part of a wider pattern. The in-fighting within the ‘greenest government ever’ has escalated to the point of becoming a major political battle ground:

The Lib Dems are pushing for economic growth through green energy infrastructure that would not only help us meet carbon reduction commitments but also fuel jobs. However, their Conservative peers hope to kick start the economy in the short-term by investing in significant gas capacity.

Gas emits less carbon than the coal-fired stations that they will replace and also cost less to construct than its renewable counterparts. The Conservatives believe that a ‘dash-for-gas’ strategy offers the best mix between energy stability, energy decarbonisation and cost effectiveness. 

Combined with the amount of proposed new nuclear capacity that will come online in the 2020s, renewables contribution to the energy mix could be severely limited.

The waiting game

The UK solar industry is still in its relative infancy, yet the phrases ‘only time will tell’ and ‘the devil is in the detail’ already feel overused. Sadly, industry has found itself in yet another situation whereby companies and investors have been left floundering in uncertainty in the wake of another consultation to reduce the level of support solar receives.

One can only hope that when DECC finally does release the RO banding rate it provides industry with some good news. Then, finally, industry might have the long-term level of support and policy protection that it has been calling out for.