UK solar could employ 50,000 people by 2020; worth £25.5 billion to the economy

Supporting the development of solar in the UK could add £25.5 billion in value to the UK economy by 2020, according to a major report published today.

The report, authored by the Centre for Economics and Business Research (CEBR) and commissioned by the Solar Trade Association, is the first of its kind to evaluate the macroeconomic benefits of solar deployment – particularly the deployment of large-scale solar.

The report calculates that ground-mounted solar farms could potentially contribute more UK economic value than other low carbon rivals such as nuclear and offshore wind by 2030. In addition, solar farms could create nearly twice as many jobs as new nuclear per kWh generated, while also saving around £425 million in reduced energy bills for consumers.

Speaking at the launch of the report, Ben Cosh, managing director of TGC Renewables, said that the document “spoke the language of the Treasury”, making it an important tool in the industry’s attempt to secure its fair share of the funding set aside for renewables in the future.   

The study uses three scenarios as the basis of the report:

Scenario

2020

2030

Solar Strategy

11GW

22GW

Ministerial ambition

20GW

40GW

Bold scenario

25GW

60GW

 

Under the most optimistic scenario, gross value added (GVA) to gross domestic product (GDP) stands at £25.5 billion – a contribution Cosh described as “material” and “the same order of magnitude that offshore wind would deliver to the economy”.

In terms of jobs, the report finds that investment in solar PV could create as many as 49,400 full-time equivalent (FTE) jobs through 2014-30. The report calculates that this equals an annual average of 8,800 FTEs employed by large-scale solar.

The report also takes aim at a common criticism that is levelled at solar farm developers, that the money flows abroad to foreign companies rather than staying in the UK. Contrary to this assertion, the report finds that the average UK content of a large-scale solar farm is 63% in 2014. “We’re trying to bust a myth here,” added Cosh. “Solar contributes to the British economy because British supply chains do most of the balance of plant.” CEBR estimates that the ratio will rise up to 71% by 2030.

Critically, the CEBR predicts that large-scale solar could be cheaper than new gas plants by 2018 and even fall below that of wholesale electricity by 2024. However, this modelling is all dependent on government providing solar with “stable policy”.

Paul Barwell, chief executive of the STA, explained why policy stability is crucial for the sector, he said: “The potential benefits of solar for the British economy are immense….However, the government risks bursting the bubble, damaging the industry and holding Britain back, because it keeps shifting the goal posts on support for solar.

“We believe that government support for solar energy should come down gradually, in line with falling costs, until solar electricity is consistently the same price as the market price for electricity. Once we have reached that point – what we call solar independence – solar no longer needs any support and will, with time, bring down energy bills. But it will need stable, gradually declining, support to get there.”

According to the STA, the proposed scrapping of the RO is already having a detrimental effect on the sector despite still technically being under consultation. Almost half of large-scale developers have told the trade association that they expect to decrease staff over the next year.

The current review on renewable obligation support has been driven by the perceived threat of rapid large-scale solar deployment consuming more of the LCF than predicted. However, solar only accounts for 5% of the RO budget. In addition, solar has been allocated a potentially restrictive budget of £50 million for the first contract for difference (CfD) allocation round, which it will have to compete with onshore wind to access. The association is calling on the government to allocate solar a larger share of the LCF in order to realise the potential economic benefits of solar on its path to zero subsidy.

The full report can be viewed here.