UK solar activity during 2021 can be seen as transformational on many levels: the emergence of a sustainable subsidy-free rooftop segment; overall deployment levels that saw almost equal contribution from ground-mount and rooftop segments; and a scale of new utility-scale solar farm project planning that almost beggars belief.
This month, I will be posting a number of articles on Solar Power Portal, explaining what’s been happening in the UK solar industry over the past 12 months, and what this means for 2022 and the current decade out to 2030. This will cover both rooftop (residential and commercial) and ground-mount (from solar arrays in back gardens to utility plants the size of which was unimaginable in the past).
This article looks specifically at the most incredible part of UK solar in 2021, and the most important leading indicator for the state of the industry in the long-term (as it relates specifically to the contribution of solar to the overall UK’s energy mix). This is of course pre-planning activity for utility-scale solar; how has the pipeline of large-scale solar farms shot up from a few gigawatts at the time subsidies ended a few years ago to a staggering 37GWpdc at the start of 2022?
Dissecting the overall pipeline of projects
Similar to other global markets, adding solar farms needs approval from a planning perspective and when feeding energy into the grid, an offer of grid connection. Other conditions can be imposed or relaxed depending on on-site consumption levels or the scale of the development (local/national sign-off).
One can generally look at any site as an opportunity in terms of being built. Think of it like a sales pipeline: some are won, lost or never really go anywhere. Therefore, the overall pipeline of sites (opportunities) is best understood by dissecting the number of projects (and capacity) by likelihood of build-out (completion), and possible date of completion.
The figure below shows how best to consider the 37GWpdc pipeline total.
I have divided the pipeline of projects (total of 910 sites above 250kWpdc adding to 36.7GW) into five different groupings, shown above, and discussed below now.
The top-bar shows the largest (by capacity) and most speculative project grouping. Within this group are projects that only have a grid offer (usually at some point from 2024 onwards), and appear to be nowhere close to planning application status. (Planning application is still the key parameter to track for UK solar additions.)
This segment is full of placeholders submitted to secure grid, often feeding into substations that were previously created to accommodate output from fossil fuel generators that are either offline now or due to come offline in the coming years. Within our forecasting, we set a 10% probability of any of these sites ever coming to fruition, unless things start to move from a planning perspective.
The next large chunk of pipeline capacity comes from projects that are still not yet at full application status, but are assessing the option by way of screening and/or scoping requests. Again, until full planning application, relative caution is put on any of these sites. However, most built projects start here from a planning perspective and for many, this is the first time planned ideas start to come to fruition. Screening/scoping can be done with pennies in terms of investments; the pounds kick in at the full application stage. Therefore, all screening/scoping sites are assigned 20% probability, pending applications being put in.
Once planning applications are submitted, things get interesting and we can really form a picture of the active pipeline. The different stages here (broadly divided into application submitted, approved, under-construction) are shown in the three lower bars in the above figure. Collectively, they add up to 9.9GWpdc, across 435 sites. The category most advanced (sites under construction and active discharge of pre-build planning conditions) is now 2.4GW. If anyone is looking at the options for sites being built in 2022, this is the first port of call. Indeed, many of the projects in this grouping can be considered as shovel-ready in as much as them being ready to get built today, and would have been done in 2021 were it not for the 10-15% uptick in module ASPs (and other build costs being higher than expected).
Stakeholders driving the pipeline
When the UK solar sector went through its incentive-driven growth cycle between 2010 and 2019, investments (and the involvement of stakeholders involved in the sites) were based principally on short-term tactics, transactions and exit strategies. Projects were almost all in the 5-50MWpdc range. It was an exercise in solar farm cookie cutting.
As a result, there was a prescribed group of key stakeholders at almost every stage, often neatly segmented by their roles and skill sets; greenfield site developers, pre-build developers, EPCs, component suppliers, long-term owners, O&Ms, asset managers, etc. Some companies played at different parts, but they were in the minority.
Post-subsidy, the main driver is long-term ownership; essentially investing as early as possible in options and supersizing the scale of the sites. Essentially, that’s the big change happening now. Remove short-term deadlines (by way of government subsidy schemes), add in the massive shift in mainstream energy supply requirements coming from renewables as a whole and complete the overall change dynamic by factoring in corporate sustainability. The result is the ability for massive investments to flow into site development and long-term planning out to 2030.
In short, this explains why we have a pipeline of projects in the UK today at the 37GWpdc level, and growing every week; and it explains why many projects are coming in above 100MW in size and some above 500MW now. Moreover, the effective pipeline of projects is likely over 40GWpdc, simply based on the anticipated shift of many of the sub-50MWpdc sites to the 70 Wpdc level once changes are made to the way exported capacity is defined (the change from dc to ac).
In the coming weeks, we will look closely at what might be expected for large-scale construction in 2022 (capturing also what this ended up at in terms of 2021 deployment levels). To access full details of the 910 large-scale solar farms within the 37GW of pipeline projects, our research team releases monthly updates of the UK Large-Scale Solar Farms: The Post-Subsidy Prospect List; details to access this report can be found here.