Monika Paplaczyk, chief investment officer at Thrive Renewables, who spoke to PV Tech Premium about the UK renewable energy sector this week, said UK solar delivery is increasingly complex.
Interest in the UK renewable sector in general, and solar sector in particular, is growing, as we approach the one-year anniversary of the election of the Labour government, which is notably more pro-renewables than its predecessor, and the upcoming launch of the solar roadmap to set out the UK’s long-term plans for the industry.
In conversation with PV Tech a few days before the Clean Power 2030 Summits, where she will speak, Paplaczyk pointed to a number of challenges for the UK energy sector, namely that the country’s grid infrastructure will struggle to accommodate all of this new renewable power capacity, and the sustained deployment of solar projects in particular will saturate the market, and diminish the strong business case for solar that has been a key component of its popularity.
“One of the major challenges I am seeing in my role of chief investment officer is how rising interest rates and inflation within the supply chain is increasing the cost of capital and putting more pressure on project economics, making delivery more complex,” said Paplaczyk, highlighting some of the financial challenges in the global solar and storage industries, which are affecting the UK.
Supply chain issues including the collapse of European solar manufacturer Meyer Burger and uncertainty about global trade viability threaten the business case for solar, which Paplaczyk said is compounded by by uncertainty regarding the offtake agreements used to acquire power from these projects.
She also acknowledged the issue presented by the long and congested queue to connect to the electricity grid. “Limited connection capacity and inefficient queue management have slowed down delivery timelines, meaning that projects could be waiting months or even years before they are able to add new clean capacity to the grid,” added Paplaczyk.
Grid connection delays improving
However, Paplaczyk noted, steps are being taken to improve, or sidestep altogether, grid connection delays in the UK.
“In April, Ofgem approved major reform to the grid connection process, with an aim to accelerate progress toward clean power by 2030 by pushing shovel-ready projects to the front of the queue,” said Paplaczyk. “Additionally, there are proposals to ensure smaller projects such as micro solar and community energy do not face delays due to large transmission upgrades.”
Thrive Renewables invests across the clean power sector. Paplaczyk explained: “Although we believe that wind and solar are equally as important, they face different market dynamics. For example, solar has benefitted from falling technology costs and faster deployment timelines, but projects are now seeing tightening margins due to market saturation and high merchant exposure.
“Although onshore wind in England is back on the table following the removal of the de-facto ban, grid connection times remain a major obstacle to progress.”
However, Paplaczyk noted that this difference in market dynamics has not made her work particularly more difficult, instead pushing her, and other investors, towards newer types of projects, such as hybrid projects, those that combine several renewable technologies at a single site, and generation facilities co-located with battery energy storage systems (BESS).
“Instead of looking solely for new wind or solar opportunities, we’re increasingly focused on hybrid and co-location models – for example, a wind site that could also host a battery or solar array,” she said.
“This ensures projects make the most of the grid connection available and builds financial resilience.”
“I look forward to attending the Clean Power summits, where I expect many of these issues to be central to the discussions. It will also be interesting to explore how solutions such as blended finance, community participation and policy reform can help to overcome them,” Paplaczyk said.
The full conversation with Paplaczyk is available with a premium subscription to PV Tech.
Monika Paplaczyk, chief investment officer at Thrive Renewables, will speak at Solar Media’s Clean Power 2030 Summits. She joins an agenda packed with industry and government voices, including energy minister Michael Shanks.
The Clean Power 2030 Summits will combine the UK Solar Summit, the Wind Power Finance & Investment Summit and the Green Hydrogen Summit.
The summits will be held in London on 1-2 July. View the agenda and book tickets here—use our discount code SPP20 for a discount.
