Renewable Obligation rate for ground-mount solar drops to 1.4ROCs

The available rate of Renewable Obligation (RO) support for solar developments has dropped from 1.6ROCs to 1.4ROCs as of today – 1 April, 2014.

Traditionally the April reference date has triggered a steep flurry of activity within the utility-scale solar sector in the UK. Developers have faced a particularly challenging time connecting projects due to the spate of flooding that hit the UK earlier this year. However, the modest degression this year has meant that developers have been under less pressure to get projects connected in time.

Finlay Colville, senior analyst at NPD Solarbuzz predicts that around 700MW of PV would have been installed during the first quarter of Q1 2014 in the run up to the ROC rate change. Colville explained that “project developers and investors appear comfortable with the ROC change to 1.4ROCs/MWh".

“ROIs are adequate to secure financing, with investors and politicians alike becoming highly vocal that solar PV is a credible asset class that offers greater long-term returns than cash or bonds, but with a lower risk than equities or property,” he added.

The PV industry has raised concerns that the mandatory registration of Chinese solar products has caused the price of modules to rise to a level that could make 1.4ROC-funded projects challenging. However, yesterday’s news that the minimum price will fall to €0.53/W for the second quarter of 2014 should help soften the impact of the drop in funding.

Going forward, support for the ground-mounted solar PV band will remain at 1.4ROCs until 1 April, 2015, whereby it will reduce to 1.3ROCs for 2015/16 and 1.2ROCs/MWh for 2016/17. In 2017 the government’s new contracts for difference (CfD) scheme will take over from the RO, although some developers have expressed concern that the new regime could deter investors.

In addition to the ground-mount rate dropping, the rooftop RO rate of 1.7ROCs/MWh will fall to 1.6ROCs/MWh, continuing to fall incrementally by 0.1/MWh each year until 2017.

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