The government has announced the results of the contracts for difference (CfDs) auction with five solar projects winning a share of the budget. Two of these, however, are unlikely to be built and the remainder represent an order of magnitude drop in utility-scale solar development.
James Rowe, director, Hadstone Energy, a successful bidder at £50/MWh:
“The good news – we got a CfD for Wick Farm! One of only five solar projects that made it through. The bad news – the strike price is £50.00/MWh! Which is roughly what we could sell the electricity for in the open market, so there's no subsidy attached. However, if we don't accept the offer, we're in for the non-delivery obligation. So we got the stick without the carrot, the hook without the bait. We just chose the wrong delivery year. If we'd put the project on ice for a year we'd have got the highly marginal CfD rate of £79.23, where maybe we could have built the project if we'd knocked enough heads together. For solar, this CfD round doesn't look much like ‘world-leading competitive auction’, it looks a lot like policy failure.”
James Court, head of external affairs, REA:
“It is encouraging that Solar PV projects gained contracts in the auction round, at a very cost efficient price, as there were concerns the technology would miss out entirely, but we would have liked to have seen these cost effective technologies given more budget to deliver greater bang for the consumer's buck. This is the first time we have used the auction process, so not too much should be read into the solar strike prices for the longer term however, as developers were forced into the CfD policy having been excluded from the Renewables Obligation, which may have led to some odd outcomes.”
Jamie Richards, head of infrastructure, Foresight Group:
“It was not expected that there would be a large solar CfD allocation in the first round because relatively few solar projects were entered into the auction. This year developers have concentrated on completing ROC projects greater than 5MW ahead of the 31 March cliff-edge deadline, and next year are expected to focus on projects of less than 5MW that are still eligible for the ROC scheme. We expect to see more solar projects enter the CfD auction process in the next round. By the time of the next auction falling costs will mean solar is broadly cost competitive with onshore wind and this should lead to a significant solar CfD allocation.”
Friends of the Earth energy campaigner Simon Bullock said:
“Ministers should be investing far more on the UK’s huge renewable energy potential, instead of wasting it on the nuclear white elephant at Hinkley. The cost of renewable energy is plummeting, and with better government support will fall even faster. Solar and onshore wind are already cheaper than nuclear power. There is a big prize to be seized: thousands of jobs, cheaper energy and tackling climate change. The coalition government should switch its support from nuclear to renewables.”
Alex Fornal, head of project development, Juwi, which made three competitive bids:
“For us the results speak for themselves. Wind has apparently taken all or most of what was an already a miniscule CfD budget. If there were any successful solar farms they have taken up whatever “crumbs” were left over after wind projects were granted CfDs. We are very disappointed but we will now look to the next government to apply a more sensible budget to the next allocation round this coming October – a budget that is fit for purpose and that provides the support for solar that it deserves. If properly supported solar will become the first renewable to compete with conventional generation and reach grid parity by the end of this decade.”
Paul Barwell, CEO of the Solar Trade Association commented:
“Is a policy that trips up the UK’s emerging solar industry really a successful policy? We don’t think so. It is essential that changes are made to the next round of auctions in October to ensure that smaller UK solar companies can have the confidence to enter. It is likely that very few solar companies even submitted a bid for a contract. The problem is that it was just far too much of a risk for a small or medium sized solar company to even put in a bid for a CfD. The system was a bit like asking first time buyers to put down on deposit on a house, without knowing whether they were going to be able to buy the house at the end of the process – and with the risk of losing their deposit.”
Dr Doug Parr, chief scientist, Greenpeace said:
“Today’s announcements show renewables’ costs are plummeting, and will mount a growing challenge to conventional sources of power in delivering energy security for the UK. Those who say we should tackle climate change but are opposed to wind and solar farms need to explain how they plan to cut carbon emissions whilst keeping consumer bills as low as possible. We’ve known onshore wind is much cheaper than nuclear for a while, but now we learn that solar power is already cheaper than new gas generation in some cases. It makes you wonder what could have been achieved with less party-political manoeuvring and more stable Government support for the clean technologies already being embraced by the world’s largest economies.”
Richard Black, director of the Energy and Climate Intelligence Unit (ECIU):
“At first sight the CfD auction looks like a win for government policy in that it’s resulting in smaller subsidies for renewable energy, and so cheaper prices for British citizens. However the tiny share of the pot awarded to solar schemes raises a big question mark about whether the CfD scheme works for smaller companies, and is something of an own goal given that solar projects were the cheapest of all in this auction. Nascent British industries will only realise their full potential if they’re given stable, predictable support over the next few years through schemes that don’t involve complex bureaucracy and big up-front investment.”