The Department of Energy and Climate Change (DECC) has confirmed that it will scrap support for solar over 5MW from April 2015 in its consultation response published on Thursday.
Despite the majority of respondents opposing the government’s proposals to close support under the renewable obligation (RO) for utility-scale solar early, DECC will press ahead with the controversial move.
The department said that it could not “ignore the very clear evidence that large-scale solar PV is deploying faster than can be afforded”. As a result DECC has confirmed that it will “close the RO to new solar PV projects above 5MW in scale from 1 April 2015, and to additional capacity added to existing accredited stations from that date, where the station is, or would become, above 5MW”.
A number of respondents to the consultation expressed fears over the mandatory switch to auction-based contracts for difference (CfDs). Industry raised concerns over the lack of clarity in definition, the design parameters of CfDs, the frequency and methodology of auctions and the available budgets. Indeed, in a document published on Monday, the department acknowledges that developers would not choose CfDs when given the choice. DECC said: “We have taken a cautious approach to the calculation of the RO for 2015/16 and assumed that all such projects likely to commission during the next Obligation period will seek support under the RO [rather than the CfD].”
Sub-5MW projects to remain eligible – for now
There has been one small piece of good news for the solar industry with the government confirming that support for sub-5MW solar under the RO will remain. The government has calculated that deployment in the sub-5MW sector does not currently represent a budgetary risk. However, DECC has warned that if deployment is “growing more rapidly than can be afforded, we will consider taking measures to protect the LCF”.
@Solar_Editor Dismayed by that. Sub 5MW will be industry lifeline & we should at least have have been given full confidence in this.
— Leonie Greene (@LeonieGreene) October 2, 2014
DECC tweaks grace period criteria following industry feedback
A serious point of contention within the industry was the department’s proposed grace periods for developers who had made significant financial commitments. DECC has confirmed that grace periods will only be provided to those projects that has made a significant financial commitment on or before 13 May 2014, the date the consultation was published.
The department has tweaked some of the eligibility criteria as a result of stakeholder meetings with the solar sector. Importantly, developers are no longer required to have gained planning permission by 13 May 2014, instead they must have submitted a planning application by that date. In addition, developers will no longer have to have a letter estimating or setting a grid connection on or before 31 March 2016. The government has also removed the requirement on developers to have spent a total of £100,000 per MW of installed capacity by 13 May 2014 in order to be eligible.
The government has also recognised the risk of grid connection delays for developers attempting to meet the RO deadline. As a result it has issued a separate consultation on the introduction of a grid delay grace period for those projects rushing to meet the April 2015 deadline. The full consultation document can be accessed here, and will run until 24 October 2014.
DECC makes changes to FiT to promote deployment of roof-mounted solar
The government has also confirmed that it will proceed with its proposal to split the >50kW degression band under the feed-in tariff.
There will now be a degression band for other-than-stand-alone installations greater than 50kW, and one for stand-alone installations.
The department believes that the move will help boost commercial-scale, roof-mounted solar. However, respondents were sceptical that the move would make any difference. The department was urged to address the non-financial barriers facing building-mounted solar as well as looking at current tariff levels which do not allow building-mounted solar to deploy sufficiently.