The United Kingdom is in the throes of a massive change of the subsidy regime for electric power. The new Electricity Market Reform (EMR) will introduce Contracts for Difference (CfD) and phase out the Renewable Obligation (RO) that has been the mainstay of many larger scale (above 5 MW) renewable projects across the sectors by 2017. But large scale solar PV will have RO support withdrawn two years earlier than other sectors, such as offshore wind. The cut-off date is April 2015.

The aim of the CfD regime, according to the government, is to encourage low carbon technologies, but there is much argument about the level of support offered to “established” technologies such as solar against emerging technologies. In fact,  the solar industry, which demands a “level playing field”, suspects that lobbying by the Big Six energy companies, egg, E.ON, nPower, SSE, etc., is to blame for the early solar cut-off. Another problem: the new CfD regime is extremely complicated, requiring detailed applications.

A lawsuit has been filed by Solarcentury, Lark Energy, TGC and Orta Solar, in regard to the early RO closure for solar. The companies argue that investor confidence in all UK renewables must be sustained. Seb Berry, Head of Public Affairs at leading installer Solarcentury and party to the lawsuit, said: “Ministers at the recent Conservative Party conference were busy talking up the contribution from solar and promising ‘long-term certainty’ for investors in all renewables.  But this does little to undo the disruption and uncertainty of the last five months, providing at best a very marginal boost to roof-top solar to 2020 while confirming a premature end to the solar RO for large-scale projects.”

Ben Cosh, Director of TGC Renewables, said: ““The core of our case has always been that the industry had every right to expect RO closure no earlier than 2017 and that any policy changes in the run up to 2017, including RO banding reviews, should avoid having a retrospective effect.  Despite being on track to become the cheapest source of low carbon power by 2018, this retrospective action against large-scale solar will damage investor confidence and funding commitments for solar.”

Alon Carmel of the Department of Energy and Climate Change (DECC), a speaker at the STA’s large scale PV conference in September 2014, said that the RO was seen as “too expensive”. Following the conference, a DECC spokeswoman said that solar PV is an “integral part” of the UK’s energy mix. So the early RO withdrawal is due to large-scale solar “having been deployed much faster than expected”.

The spokesperson said there will be a “grace period” to protect projects that have made significant financial commitments by 13 May 2014, when the consultation on the change began. She continued: “We will consult on an additional grace period to protect projects on track to commission before 1 April 2015 against the risk of missing the RO closure date due to delays in getting connected to the grid.”

Feed in Tariffs (FIT) will remain in place but apply mainly to smaller scale renewable projects, not larger scale rooftops.

Effect on solar

According to the Solar Trade Association (STA), the UK government’s recent decisions are particularly damaging for solar power. The STA terms solar PV “the UK’s most popular energy technology, which has gone from near zero contribution at the start of this government, in 2010, to providing 9.4% of renewable power in the second quarter of 2014.

The government claims that it is moving solar out of the RO two years early because of pressures on the RO budget. These claims are rejected by the industry. Paul Barwell, CEO of the STA, believes that the falling cost of solar should justify support. “No other energy technology has ever delivered cost reductions at the speed and scale seen in solar power. Solar has consumed only about 1% of the RO budget.” He said that the solar industry is asking for “just one more push of stable policy support to deliver parity with fossil fuels towards the end of the next Parliament”. And he stressed the urgent need for more green energy.

Toddington Harper, CEO of Belectric UK Ltd and Big60Million,  a new community benefit energy company and subsidiary of Belectric, said: “The closure of the RO to projects greater than 5 MW in size from April 2015 demonstrates that the UK government has missed a huge opportunity, and needs to raise the bar in terms of its UK solar ambitions.” He suggested that supporters of solar energy could affect next year’s general election next year. “Our industry is increasingly influential,” he said, also noting that the CfD mechanism will take over from the RO for projects larger than 5 MW. “So we hope that this new structure enables the industry to continue to deliver, grow, and reduce costs to the point where subsidies are no longer necessary.”

Solar deployment and alleged discrimination

According to the STA, DECC has effectively capped solar deployment at 4GW by 2020. However, the STA claims that this cap is based on out-of-date modelling carried out in 2012 that does not reflect major progress in technology cost reductions in recent years.

 Barwell added: “As a result Westminster is picking the energy mix and tilting the playing field away from solar power developments, despite current cost data (repeatedly provided by STA). We have provided data to show that solar can save consumers money, and opinion polls reflect this.”

According to an early October 2014 report by the International Energy Agency (IEA), solar PV could conceivably be used to generate as much as 16 percent of the world’s electricity needs by mid-century with solar thermal adding another 11%.

 Barwell said: “It is crazy to pull the rug on the technology that the IEA says could be the biggest global power source by 2050. This is unfair and unjustified discrimination against large scale solar. A fair outcome would be an RO banding review based on up-to-date costs, which we have provided to DECC. Our message is simple: we want to compete on a level footing with the other technologies that still get RO support.”

Elizabeth Block