The renewables industry is in turbulent times. The surprise removal of the Climate Change Levy Exemption status, the closure of the Renewables Obligation to onshore wind, the imminent review of the feed-in tariff, the overspending of the Levy Control Framework (LCF) and its implications for the second round of of Contacts for Difference (CfDs) are just a few current issues. It seems politics rather than pragmatism is calling the tune on renewables policy.

For some time now, government seems averse to delivering the biggest bang for buck when it comes to renewable power deployment, seemingly shunning cheaper renewables. Given this, one wonders about the wisdom of highlighting just how near PV is to reaching grid parity – either government won’t care, or it will feel justified in ending support prematurely.

Next Thursday the Renewable Energy Association will launch a report by KPMG that will need very careful handling. Hopefully sense will prevail, however, and government will see the sense in nurturing PV in its transition into a post-subsidy world, so that deployment continues at a level necessary to retain a viable industry.

The astonishing price reduction seen in solar power is hard to keep pace with, plus it can be deployed quickly and is a comparatively easy market for new entrants. These three characteristics make it extremely challenging for governments to get it right, when stimulating the market. It’s all too easy to either overheat the market, or conversely to leave it undernourished. Right now the UK is the third largest market, globally, for ground-mounted solar, yet other sectors of the market are languishing.

The reality is that solar is approaching the point at which it costs as much to generate one’s own electricity as it is to buy it from a supplier. This is known as “grid parity”, or in the context of smaller scale users “socket parity”. Ground-mount solar will be the first of the various market segments to achieve this, which for this sector means it’s approaching the costs of conventional generation.

However, it would be a mistake to think that the reaching of grid parity means that government support can end. Even if the costs are the same, under the current energy policy regime it’s a great deal easier to continue to buy electricity as one has before than it is to invest in a solar system of one’s own. And that applies whether you are a householder or a business.

Furthermore, in the politically and policy-fraught world of power generation, without incentives pretty much no new generating capacity would be built. That is why in the UK there are concerns about ‘the lights going out’. Right now, even existing power stations need a subsidy to stay open. The Capacity Market pays gas and coal-fired plant for merely committing to staying open and be available in periods of short supply and high prices.

Leading solar companies are looking forward to the day when they can operate in the calmer waters of an unsubsidised electricity market. This does not mean they want to see the feed-in tariff or RO end prematurely.

The promise of reaching grid parity has long been the Holy Grail. This argument was powerful when the technology was so very expensive, there had to be a reason for persevering with it.

Now it is in sight, we must be careful…

The conclusions from the study should not be interpreted as justification for rapid withdrawal of solar subsidies. To do that would be snatching defeat from the jaws of victory. The REA will set out its own views on what’s needed going forward, alongside the publication of the KPMG report. The backdrop is unhelpful, what with the LCF money either having been spent or what remains of it being set aside for other technologies, which solar can now beat on price. Therefore new approaches are required.