Solar CfD projects face termination and delays

Two of the three remaining solar projects that were allocated Contracts for Differences (CfD) last year have been beset by delays and the termination of subsidy support.

An update to the Low Carbon Contracts Company CfD register confirmed that the Netley Landfill Solar Park CfD was terminated in late March, while Solar Power Portal can report that Cambridge County Council’s Triangle Farm Solar Park has been negotiating for an extended deadline after struggling to gain grid access.

Five solar PV projects were awarded CfDs last February and, as it stands, only Lightsource’s Charity Farm will generate power on schedule with a proposed start date of 29 June 2016.

The Triangle Farm Solar Park has a targeted commissioning date of 1 July 2016, but SPP understands that the site will not be operational until October at the earliest.

Cambridge County Council has been forced to negotiate with LCCC for a derogation for the project under force majeure after UK Power Networks, the Distribution Network Operator for the east of England, could not provide it with a grid connection due to capacity issues in the local area.

Only when the project receives a formal target date from UKPN can a construction programme be formulated, and a spokesman for CCC informed SPP that this would allow for construction to complete at some point between October and the end of the year.

Meanwhile the Netley Landfill Solar Park had its CfD terminated in late March, prompting the developers to seek an alternative means of financing its construction.

The Netley site was first proposed by Renewable Energy Group but the developer’s collapse late last year prompted the asset to be handed onto REG Power Management (RPM), a separate entity formed by REG’s original management team.

A spokesman for RPM informed SPP that it had been looking to persevere with Netley under the CfD mechanism, but was unable to do so after the Low Carbon Contracts Company refused an extension to its development deadline.

The CfD’s termination was agreed, however the company still intends to develop the project under new financing and expects it to reach financial close later this year.

The recent developments will serve as yet another indictment for the much maligned CfD framework which was originally intended to replace the Renewables Obligation. Two successful projects were almost immediately cancelled after the £50/MWh strike prices were considered uneconomical, and the scheme’s design has also been roundly criticised.

The Department of Energy and Climate Change has since excluded solar and other established technologies from future CfD allocation rounds, however a subsidy-free – or “market stabilising” – alternative has been discussed and is rumoured to be in the pipeline.