The latest round of the UK’s renewable energy support scheme saw solar scoop almost 2GW of new capacity. Gareth Simkins examines the winning projects and looks ahead to assess how solar is likely to fare in future rounds.
A total of 56 ground-mounted solar projects won backing in the latest round of the UK’s Contracts
for Difference (CfDs) renewable energy support scheme in November.
According to government figures released on 8 September, the total capacity of allocation round 5 (AR5) comes to 1,928MW. Considering that Solar Media estimates that national capacity, on the ground and on the roof, will hit 17.6GW by the end of the year, the figure represents a significant inroad into reaching the government target of 70GW by 2035.
Doing so implies deploying around 4GW of capacity each year, both on roofs and on the ground, so deployment will have to accelerate further. But this is precisely what the Department for Energy Security and Net Zero (DESNZ) is seeking: AR5 was the first round to be run annually, rather than every two years. It also comes ahead of the roadmap due to be published in February by the government-industry Solar Taskforce, which will set out how the sector expects to meet the goal and overcome barriers such as grid access and the availability of skilled workers.
Of 56 winners, 13 (with a capacity of 394MW) are contracted to come online in 2025/26, 4 (151MW) in 2026/27 and 39 (1,383MW) the following financial year. The total is lower than AR4, which had 66 winning projects, coming to just over 2.2GW.
The agreed strike price was £47/MWh, the same as the maximum bid price set by the government.
As strike prices are expressed in 2012 prices, adjusted according to the Consumer Price Index, the actual value of the price is 37.4% higher, coming to about £64.60/MWh in today’s money. Although the increment is substantial, the cost is still far less than it was when the CfD regime kicked off in 2015, when £79.23/MWh was agreed for three projects to be commissioned in 2015/16 (equivalent to about £108.88/MWh now).
It is also worth stressing that £64.60/ MWh is considerably less than what these projects would receive if they were run on a merchant basis, assuming current wholesale electricity prices persist. The upshot is that the 56 sites are expected to return significant sums of money to the Treasury, in return for financial security and thereby the confidence to invest.
The published capacities of the winning solar projects range from only 7MW to 57MW. But on inspection, there appears to be some ambiguity about what these figures represent.
On the face of it, the largest project – an unnamed one from Enso Green Holdings – looks like the only nationally significant infrastructure project (NSIP) on the list, being above the 50MW threshold for consideration by the government, rather than local authorities. Its nearest competitors in size are all 50MW, or just below.
But the NSIPs in the pipeline are well known – and nothing matches this project. Furthermore, the extra costs of building such installations mean that building one so close to the capacity threshold would make little sense.
This article was first published on Solar Power Portal’s sister publication PV-Tech. You can find the full version here.