Energy secretary Amber Rudd has confirmed that there are currently no plans for large-scale solar to be handed future contracts under the Contracts for Difference (CfD) mechanism.
Rudd made the announcement during this morning’s energy and climate change oral questions session in parliament and cited the UK solar industry as having noted that, subject to planning permission, it could develop solar without the need for subsidies.
“We don’t have plans at the moment for a large-scale solar contract. What we have found is that large-scale ground-mounted solar have confirmed to us that they do not need any subsidy and that they can continue, subject to planning permission, because costs of fallen to such a great degree they can continue without any form of contract,” the secretary of state said, responding to a question from Liberal Democrat MP Tom Brake.
The confirmation will come as a significant blow for large-scale projects left stranded by the premature closure of the Renewables Obligation scheme and developers with any interest the CfD process, which was originally designed to replace the RO.
The government has previously stated its intent to launch a possible three CfD rounds over the course of this parliament but it has not been made clear which technologies would be able to apply.
In November the Department of Energy and Climate Change confirmed to Solar Power Portal that so-called ‘pot one’ technologies such as solar and onshore wind would be excluded from at least the first allocation round, however Rudd’s announcement today would appear to have extended that exclusion to all three future rounds.
Both Rudd and energy minister Andrea Leadsom had alluded to this being the case by continuing to refer to the CfD process as “offshore wind auctions” in parliamentary sessions.
Rudd's comments have not been well received by the industry. The Solar Trade Association has noted that her department's own – still ongoing – banding review seems to defy her belief that large-scale solar is subsidy-free.
— STA (@thesolartrade) February 11, 2016
That banding of 0.8 ROCs equates to roughly £34/MWh of subsidy, and the STA has said that this is what the government currently estimates as necessary for solar projects to be commercially viable.
Meanwhile Leadsom revealed that the department was still consulting with the wider renewables industry on the concept of subsidy-free CfDs, or ‘market stabilising CfDs’ as DECC is now labelling them.
The concept has been banded around before but with little detail and various models of how they might actually work are believed to be under consideration. Leadsom confirmed that her department was looking at them, but said it was not “policy that could be done on the back of a fag packet” and would take time to conclude.
Graham Stuart, the Conservative MP for Beverley and Holderness, urged that the department bring them forward “as quickly as possible”.
This is a developing story and will be updated as further information is available.