Solar can be the UK’s first subsidy-free renewable energy source and could reach grid parity by 2020 as long as the government can provide a “smooth transition” over the coming years, a report issued by both the Renewable Energy Association and Big Four auditors KPMG.
The report, launched today, models various scenarios in which solar PV can progress to grid parity over the next five years, but also highlights the need to maintain and gradually phase out subsidy support.
The REA has provided a ‘roadmap’ for the UK’s solar sector and issues a number of recommendations, most notably relating to the forthcoming feed-in tariff review and how the government must ensure tariffs are set “at a level that allows acceptable returns”, with degressions clearly set out.
Also recommended is the establishment of a “national energy strategy” to include a comprehensive overview of the national grid and the importance of storage technologies alongside solar, and the need to investigate the potential of alternative ways to support the solar industry financially.
The REA has suggested the potential of certain tax breaks for solar projects instead of specific subsidies, which would reduce the burden on the over-budget Levy Control Framework, as well as net-metering schemes that have helped nurture other international markets such as the US.
“We need to get to the low carbon economy in the most cost effective way, but to do that government and industry have to work together,” REA chief executive Nina Skorupska said.
“Clear and stable policy leadership is vital, and as robust as solar is, it can still be held back just short of the finishing line by misguided government interventions.
“This report shows how close solar is to competing with traditional power generation, and with positive government decisions we can ensure the smooth transition from subsidy to business as usual,” she added.
The publication is particularly timely given yesterday’s developments from the Department for Energy and Climate Change, which the industry has widely rounded upon as a threat to the UK solar industry and its pursuit of a subsidy-free future.