The Department of Energy and Climate Change (DECC) has released its Impact Assessment over the proposed cuts to the level of support solar PV receives under the Renewable Obligation (RO). Government is currently consulting over plans to slash the technology’s support down from 2ROCs to just 1.5ROCs from April 2013.
The Department’s mooted plans have already received fierce criticism from the solar industry. However, revelations published in DECC’s own Impact Assessment are set to further anger the UK solar industry.
First of all, the Impact Assessment clearly states that the whole purpose of the RO banding review is to “set solar PV RO support rates that are broadly equivalent to the rates under the Feed-in Tariffs scheme for greater than 250kW to 5MW installations.” However, under the new, lower 250kW-5MW tariff rates there was just one project installed over the months of April, May, June and July. Clearly, setting tariff rates to reflect the lower rates will do nothing to encourage the uptake of large-scale solar in the UK if just one solitary project was installed under the new tariff levels.
Indeed, the Impact Assessment goes on to state DECC’s predictions for total large-scale solar deployment (>5MW) under two separate scenarios – a ‘do nothing’ scenario, whereby RO support for solar remains at 2ROCs until 2017. And the proposed lower RO banding of 1.5ROCs for 2013/14, 1.3ROCs for 2014/15, 1.1ROCs for 2015/16 and 0.9ROC for 2016/17.
Under the ‘do nothing’ scenario, DECC predicts that >5MW solar installations will account for 95MW capacity in 2013/14. However, under the revised RO banding DECC predicts that deployment will plummet to 20MW at best and possibly curtail the large-scale market so much that no installations >5MW are installed. Considering that 120MW of >5MW solar parks are already approved for planning in the UK for 2012/13, the proposed banding levels are set to severely damage the large-scale renaissance currently happening in the UK.
Harry Shepherd-Cross from Ardenham Energy attacked DECC’s modeling methods, stating: “One cardinal mistake is the old error of linear expectations: Government assumes costs will continue falling. But the Chinese panel manufacturers who have lead the extraordinary price reductions in the last few years are now losing money and are in serious trouble. All businesses in the supply chain have seen their margins evaporate. We are scraping the barrel now for any further cost reductions in the medium term, and there are very few economies of scale for large scale solar plants.
“The Government must remember that it encouraged private investment in solar businesses on the basis of subsidies that would be fixed for two years then reduced by 9 percent. For smaller solar PV systems we have now had a 65 percent reduction and on larger systems 80 percent. The sector really can’t take much more of this, and now they have bloodied the investors in this part of the renewable sector they are going to be hard pressed to get these same investors to support their other policy led initiatives.”
The Department is keen to stress that the proposed RO banding rates for solar are part of an ongoing consultation and are therefore encouraging all members of the solar industry to reply to the consultation providing up-to-date figures for DECC to accurately asses its proposals.
Alisdair Grainger, Head of the Feed-in Tariff at DECC will be speaking at this year's Solar Power UK 2012 about Government's plans for the future of both the RO and FiT schemes and what it means for large-scale solar development in the UK. Solar Power Portal has partnered with Solar Power UK to offer all MCS-accredited solar installers the opportunity to attend the world-class solar seminar series for free – a £50+ saving. To register your attendance visit www.solarpowerukevents.org and enter the following code when booking your desired seminar: SPPMCSF3.
The full consultation document can be viewed here. Respondents have until October 17 to respond to DECC’s proposals.