The Solar Trade Association has accused the government of stacking the deck against solar after the Department of Energy and Climate Change (DECC) revealed that only £50 million would be available per year in the auction pot for Contracts for Difference (CfD).
Solar developers looking to install projects over 5MW from April 2015 will have to compete with hydro, energy from waste, onshore wind, landfill gas and sewage gas for a share of the proposed £50 million pot.
Reacting to the news, Leonie Greene, head of external affairs at the STA said: “The message the government is sending out today is clear. It is backing nuclear and other more expensive renewables over value for money solar.
“This is an absurd decision that will ultimately hit energy bill payers across Britain. Solar is already cheaper than offshore wind; it will soon be cheaper than onshore wind, and it stands a realistic chance of being cheaper than gas by the end of the decade. But this is only achievable with stable government support and a level playing field.”
Greene continued: “Today’s decision shows the government is stacking the deck against solar, the most popular form of local energy, by starving the industry of resources. The sheer complexity of the new CfD policy mechanism disadvantages small- and medium-sized solar businesses who are entering a game of three dimensional chess against multi-national utilities. Critical requirements for small and medium businesses have been ignored.”
The solar industry was left reeling after the government published surprise proposals to remove support for solar over 5MW under the Renewable Obligation (RO) scheme. Ground-mount solar in the UK had been enjoying an unprecedented boom under the RO regime after dramatic cost reductions. However, from April 2015, government is forcing developers to move over to the new CfD mechanism.
Greene explained: “The point is that only large-scale solar, which was on track to being subsidy-free, is being exposed to this new CfD system without having the back-up of the old scheme. The government needs to fix that by guaranteeing a minimum amount of funds for solar.”
The STA estimates that if all of the £50 million budget is used by solar that would represent around 1GW of new capacity – a number the association describes as a “considerable reduction on the current market”.
The association is keen to point out that the £50 million per year budget allocation is miniscule when compared to the £1.2 billion that will be paid out to eight CfD projects in 2020-21, which includes five offshore wind projects.
Greene concluded: “The solar industry is not asking for special treatment – just a level playing field for solar and for small businesses, who provide much needed competition.”