Uncertainty surrounding the switch to Contracts for Difference (CfD) for large scale solar will make it difficult for smaller companies and new market entrants to compete, according to speakers at the Doing Solar Business in the UK conference in Munich.
Taking place a day ahead of the start of Intersolar Europe, the conference aims to promote the UK solar market internationally. This year the offering included a sizeable portion of the morning session dedicated to renewable heat, for which the UK has introduced its own dedicated support scheme, the Renewable Heat Incentive (RHI).
In addition to CfDs and the RHI, topics included a talk from market analyst Finlay Colville of Solarbuzz, who ran through a breakdown of market statistics. Colville highlighted the UK's position as the fourth largest market globally in 2014. Solarbuzz has ranked the UK in fourth position after China, Japan and the US.
According to Colville, this year 'hundreds' of opportunities will exist in the UK market for businesses ranging from solar farm developers to security fence contractors. Colville went on to say that close to 30% of all installed capacity in Europe the past year has been brought online in the UK. The rooftop market has installed 100MW per quarter during this period, according to Colville.
However, Colville expects that this high volume of activity in the UK market extends only until 31 March 2015, when the ROC (Renewable Obligation Certificate) support scheme for large-scale solar farms, over 5MW in size, expires.
Nick Boyle of Lightsource Energy and Lars Weber of NEAS Energy both put forward the view that CfDs will make it difficult for companies beside established players with access to capital to build large solar projects. Boyle, whose presentation was entitled "Succeeding in the UK market: head down, keep pushing", said the CfD scheme was a gamble for developers, who would not know whether their project would be approved until it came to the bidding process. CfDs, Boyle said, might disrupt the hegemony of the so-called 'BIg Six' energy companies that dominate the UK landscape but with the barriers to entry for smaller companies, the result of such a disruption might even utlimately mean the creation of a 'Solar Big Six', where a small number of large solar companies would be able to bear the brunt of uncertainty by using scale and greater access to funds. Life would be made difficult for small contractors and developers, Boyle said.
Lars Weber of NEAS Energy, which manages 6GW of generation assets across Europe including 4.5GW of renewable energy assets, talked up CfDs as broadly positive. However, Weber revealed that DECC had told NEAS in a consultation that if the budget set aside for a year's CfD auction process was not fully allocated, it would not roll over to the next financial year. This came as a surprise to many in the room.
Weber also said that in terms of financing, UK developers could actually find it easier to go to German banks for funding, with that country's solar industry in a more mature stage of development, stripping away some of the perceived risks to investors. According to Weber, funds from German state development bank KfW could be accessible to UK-based companies if their initial approach was conducted via German banks rather than British.
According to Weber, the bottom line is that firms looking to build PV plants in the UK under CfDs should make themselves ready by October this year to have a good chance of meeting the 31 March deadline comfortably.
Moving on from CfDs temporarily, Edmee Kelsey of 3Megawatt said the commercial rooftop segment in the UK holds a great deal of potential. UK rooftop solar also has the key advantage of being considered favourably by Greg Barker, the Conservative party politician who heads DECC.
Kelsey quoted Barker, who said that the UK has an estimated 250,000 hectares of south-facing rooftops. In addition, the UK government has said previously that it will make space available on roof space at government estate land for up to 1GW of new PV generation capacity. Kelsey said that rooftops also represent an opportunity for UK developers to come up with new business models for managing these assets. These could include combining PV systems with energy storage, or various new power purchase agreement (PPA) or rooftop leasing models comparable to those used successfully in the US by companies like SolarCity or Sunedison.