LONDON -- DECC, the UK’s Department of Energy and Climate Change, has unveiled proposals for further reform of the country’s renewable energy support program. The measures include plans for the closure of the Renewables Obligation scheme to new solar PV capacity above 5 MW from 1st April 2015.
Despite the intention of this proposal to curb installation what we risk facing is booming installations of solar before the ROC scheme would expire, between now and 1st April. — Josefin Berg, Senior Analyst for Solar Power, Power and Energy Division, IHS Technology
Outlining the plans at the launch of a series of consultations, the government argues that the proposals are designed to maintain the growing momentum behind renewable electricity investment in the UK and a smooth transition to the new Contracts for Difference (CfD) support scheme, while continuing to deliver value for consumers.
In one of the key measures of the new proposals, the government points out that large-scale solar is deploying much faster than expected. Industry projections indicate that by 2017 there could be more than the 2.4 to 4 GW set out in the electricity market reform (EMR) delivery plan deployed.
This is behind the consultation on proposals to close the RO to new solar PV capacity above 5 MW from 1st April 2015, though the proposals do include grace period arrangements to protect developers, which have already made significant financial commitments to projects.
The proposals also envisage keeping the RO open for projects under 5 MW, which are not eligible for the new Contracts for Difference (CfDs). Projects above 5 MW will be able to apply for CfDs — part of the Electricity Market Reform Programme that is slowly progressing.
Meanwhile, following on from its recently published Solar Strategy, the U.K. government has also determined that more focus on deploying solar panels on industrial and public sector buildings is required since this sector had been deploying at lower levels than anticipated.
In order to support rooftop deployment, the government has also launched a consultation on splitting the current "degression band" for projects over 50 kW under the Feed-In Tariffs scheme (FITs) into two parts — one for standalone, and one non-standalone (rooftop, for example). Thus tariffs for building-mounted solar panels would reduce at a slower rate than those for ground-mounted.
The U.K. has a total of some 2.7 GW of solar PV capacity currently installed.
As part of the measures the government also launched a consultation on support for community energy projects under the FIT scheme, considering the possibility of increasing the maximum capacity for community anaerobic digestion, hydro, onshore wind and solar PV projects from 5 MW to 10 MW under the FITs scheme, and whether more can be done to allow grants to be combined with FITs payments for community projects up to 5 MW.
DECC also confirmed that the budget for CfD renewables spending will be divided into groups including established technologies and less established technologies.
Technologies in the established group have benefited from significant cost reductions following early research and development and as a result are, in some cases, taking forward large-scale deployment.
Included in this category are onshore wind greater than 5 MW; solar photovoltaic greater than 5 MW; energy from waste with combined heat and power (CHP); hydro between 5 MW and 50 MW; landfill and sewage gas.
These technologies will compete with each other for support from the first allocation of Contracts for Difference, helping to reduce costs and ensure that consumers get good value for money, the government says.
In the government’s view less established technologies have a range of characteristics including significant potential for cost reduction and delivery of low-cost renewable generation in the future.
Included in this category are offshore wind; wave and tidal stream; advanced conversion technologies; anaerobic digestion; dedicated biomass with combined heat and power and geothermal.
These technologies will only move to auctions if there are more applicants for Contracts for Difference than are affordable within the budget.
In addition the government is also launching a consultation under EMR on proposals to treat biomass conversions as a separate technology group, and Scottish Islands onshore wind projects as either part of the “less established” technology group, or as a separate technology group. A minimum allocation for wave and tidal stream to ensure that budget is available for at least 100 MW to be deployed is also under consideration.
Responding to the development, the Renewable Energy Association (REA) expressed disappointment, saying the moves create yet more uncertainty and instability for most renewable power industries. “Proposals to close the RO for 5-MW+ solar farms, meanwhile, simply create very damaging instability to existing policy,” the REA added in a statement with chief executive Dr Nina Skorupska noting: “Government must ensure that policy drives and rewards technology cost reductions with a stable trajectory of gradually declining financial support, not the cliff edge the government is proposing for solar.”
Similarly scathing, Greenpeace U.K. chief scientist, Dr Doug Parr, said: “Solar is hugely popular in the U.K., costs are falling faster than for any other energy source, and the latest technology is on track to beat nuclear on price. Sowing uncertainty for a key source of clean, home grown energy, as ministers are doing, makes no economic, political, or strategic sense.”
Parr continued: “Far from hitting the big energy companies this compulsive policy tinkering sucks confidence out of independent generation and leaves the future of community solar projects up in the air — yet independent producers are our best hope to challenge the big six’s stranglehold on the market.”