According to a report updated by the U.K. Department of Energy and Climate Change (DECC) on Friday, the country added 202 MW of solar photovoltaics in the third quarter of 2013.
Of these, 140 MW were installed through the U.K.’s feed in tariff (FIT) scheme and 48 MW were commissioned and accredited through the Renewables Obligation Certificates (ROC) program. A further 45 MW were not accredited at all. However, microgeneration certification capacity (MCS) in the third quarter fell significantly, which likely means that some rooftop projects were moved to other incentive schemes.
Compared to the first six months, when the U.K. added 707 MW of solar PV, the rate of photovoltaic installations in the third quarter fell significantly.
FIT-driven growth and degression rates
Cumulative solar PV capacity in the U.K. at the end of the third quarter stood at 2,597 MW, dispersed among 477,168 projects.
The vast majority of solar PV installations, 417,695 projects of a total 1,523 MW capacity, are FIT-financed micro projects of up to 50 KW each. A further 548 installations, corresponding to 300 MW of installed capacity, come from projects greater than 50 KW and up to 5 MW each, also supported by the FIT regime.
The U.K. Office of Gas and Electricity Markets (Ofgem) recently decided that there would not be degression of the feed-in tariff for smaller than 50 KW starting in January 2014.
Thus, starting Jan. 1, FITs for systems up to 4 kW will continue receiving up to £0.1490/KWh; systems greater than 4 KW and up to 10 KW will receive up to £0.1350/KWh; and systems greater than 10 KW and up to 50 KW will receive up to £0.1257/KWh.
The feed-in tariff for installations over 50 kW will follow a 3.5% degression scheduled on Jan. 1. Details of the new FITs for these systems can be found here.
Under Ofgem’s FIT program, a compulsory degression rate of 3.5% occurs every third quarter. However, the degression timing differs among the various tariffs.
Increasing amount of large-scale capacity
Although the British photovoltaic market is mainly driven by small projects supported through the FIT scheme, 2013 has seen an increasing amount of large-scale capacity and this looks likely to remain the case in the near future.
For instance, Good Energy Group, one of the U.K.’s leading renewable electricity suppliers, launched in October its first corporate bond with a coupon of 7.25% a year. The firm aims to use the bond issue to build solar and wind farms around the U.K.
Applications were due to close on Nov. 13 and the company said it was looking to raise £5 million up to an over-subscription maximum of £15 million. Finally, on Oct. 24, Good Energy announced it had closed the offer early having received applications in excess of the maximum permissible subscription of £15 million.
The company says it has pre-planning consultations started on a 200 MW portfolio of solar PV. Last week it announced a planning consent had been granted on a 28 MW solar site in East Dorset. In October, Good Energy announced that 51.1 MW of planning consents had been successfully granted: 8.3 MW in Cornwall; 12.8 MW in Dorset and 40 MW in South Wales. By 2016, Good Energy aims to develop 110 MW of its own solar and wind generation capacity.
Likewise, Adiant Capital, a Luxembourg-based investment management firm specializing in renewable energy infrastructure, recently entered the U.K. market. The company completed in September its first 7 MW solar farm, equipped with 28,272 Canadian Solar polycrystalline modules, in Somerset.
Adiants co-founder and managing partner Nils Hammon said: "Our strategy for the U.K. is to deliver, through both our development and construction capital funds, a portfolio of operating assets of at least 150 MW over the next 18 months. With an already secured portfolio representing 65 MW of new construction-ready projects to be completed before 31 March 2014, we are confident we can deliver our plans."
In October, pv magazine revealed that Adiant Capital would build and own the second phase of a 36 MW solar farm in Dorset initiated by Eco Sustainable Solutions.
Solar farms have also changed hands. Last week, Foresight Solar Fund Ltd reported it had completed "the acquisition of the 32.2 MW Wymeswold solar power plant, the U.K.s largest operating solar power plant, for a net consideration of £43.7 million (excluding cash and accrued revenues of £1.3 million)." The Wymeswold plant is located on a abandoned World War II airfield in Leicestershire and was connected to the grid in March 2013.
U.K. energy market analysts say the recent mobility in the solar sector is not unusual given the country’s looming energy supply gap: ageing nuclear and many polluting coal-fired power plants are due to close this decade and will need to be replaced by new capacity. The crucial question is what sort of energy mix the U.K. is aiming at.
UK Renewable Energy Roadmap released
Meanwhile, the DECC published this month the 2013 update of the U.K. Renewable Energy Roadmap. The DECC plans to publish the next Update to the Renewable Roadmap in late 2015, and biannually thereafter.
The roadmap initially depicts a positive solar PV outlook, stating that "total solar PV capacity grew by 1 GW between July 2012 and June 2013, representing a 70% increase."
A few other positive facts are also mentioned, such as the opening of the National Solar Centre in Cornwall in April 2013; the initiation by the government of the Solar PV Strategy Working Group, which held its inaugural meeting in March 2013 and includes members from the main trade bodies, manufacturers, financiers, developers and installers, and aims to advise the government on solar PV policies; and the solar PV technology recently receiving the highest public approval rating of all renewable energy technologies at 85%.
As with the roadmap on the future of U.K. solar published in October, however, the Renewable Energy Roadmap again asks whether the cost reductions necessary for 20 GW by 2020 are feasible and calls for all carbon impacts, grid systems balancing, grid connectivity and landscape and visual impacts of solar PV deployment to be fully understood.
"The ability to deliver further reductions in the installed costs of solar PV will determine the level of sector growth and the ability for the levelised cost of solar PV to become competitive with other energy sources," the roadmap says.
Renewable energy future far from secure
Despite the DECC announcing on Oct. 31 that renewables’ share of electricity generation increased from 9.7% in the second quarter of 2012 to 15.5% in the second quarter of 2013 (around half way to the governments 2020 renewable electricity goal), strong development of the sector remains far from secure.
A strong U.K. parliamentary committee warned British Prime Minister David Cameron last week that his pledge to cut the green levies from electricity bills could increase the cost of energy bills rather than decrease them.
The energy and climate change committee said the country needs £110 billion of new investment in electricity generation and transmission infrastructure that could be at risk if there is a green levy policy U-turn.
The British prime minister had pledged in late October to roll back green charges that add extra costs to energy bills, responding to the recent announcement by the U.K.s major energy companies to raise prices. The public has expressed anger at the announcement of further increases in energy prices and even former British Prime Minister John Major called for a windfall tax on the excess profits of Britain’s big six energy companies.
"Trust between those who supply energy and those who use it is breaking down," U.K. Energy Secretary Ed Davey told the industry last week at the Energy UK conference in Birmingham. Indeed, Energy UK, the industry’s trade body, warned that household bills could rise by another 50% over the next six years.
Following Cameron’s announcement to review green taxes on energy bills, the British Photovoltaic Industry Association (BPVA) contacted the DECC asking for clarification of the announcement and the likely impact on the countrys solar energy industry. A senior DECC official then stated supporting mechanisms like FIT, ROC and CfD will not be affected by the review of green taxes on energy bills ordered by the Prime Minister David Cameron. The government remains absolutely committed to driving unprecedented investment into clean, green energy and have set in place the long term, stable frame work to deliver that. However, where ever possible, we will continue to work with industry to drive down subsidy, mindful of the need to deliver value for consumers and minimize impact on bills."
On Oct. 21, however, the U.K. government announced it had reached a deal with EDF Energy for a new nuclear power station at Hinkley Point in Somerset. "Eight of the nine operational nuclear power stations in the U.K. will reach the end of their planned life in the next decade," said the DECC. "So the agreement today is a demonstration of the governments commitment to a new fleet of nuclear power stations to replace those due to close and to protect Britains future energy security."
The Solar Trade Association (STA) said that by the time the new nuclear power plant goes live in the 2020s — assuming it doesn’t suffer the same delays and cost increases as other reactors across Europe — solar power will be cheaper. The strike price agreed by the government for nuclear power of £92.50 per megawatt hour for 35 years, which "could be subject to adjustments," STA said, is higher than the 0.30 per watt solar panels world pricing that STA estimates will be reached by 2018/19.
STA CEO Paul Barwell said, "Solar power has already achieved unprecedented cost reductions over the last three years and is projected to continue to reduce costs in real terms over the next decade. Solar power risks being unfairly constrained in the U.K. even when it will be cheaper than other low carbon technologies."
Politics and policy debates shift fast in the U.K. and they have yet to determine the country’s energy future.