UK proposes incentive cuts to large-scale solar

The U.K.’s Department of Energy and Climate Change (DECC) is proposing the withdrawal of financial support for large-scale solar PV installations in the country from April 1, 2015, in an effort to control state spending and support the nationwide deployment of mid-scale and rooftop PV.

A consultation published on Tuesday by the DECC outlines steps to close access to the Renewable Obligation Certificate (ROC) for new solar PV installations above 5 MW by next year. The consultation explains that in order to keep government financial support within the Levy Control Framework (which if exceeded could impact upon customers’ bills), action must be taken on what has become one of the U.K.’s most dynamic industries.

The DECC admits that "large-scale solar PV is deploying much faster than previously expected", adding that as part of its Solar Strategy, the mid- to longer-term aim is to support the growth of the U.K.’s rooftop and mid-scale sector.

"Given the under-deployment of non-stand-alone PV to date, and the relative success of stand-alone PV, we are keen to ensure that the existing budget for over 50 kW installations other than stand-alone PV is protected to ensure deployment in this part of the sector," read the consultation. In other words, there is only a limited pot of funds available to the Treasury, and the Solar Strategy’s intention is to boost smaller-scale solar.

In order to develop such support, the consultation proposes splitting the current feed-in tariff (FIT) digression band for installations over 50 kW into two parts: one for stand-alone installation and one for non-standalone. The slower degression rate would be applicable for rooftop installations – a move that will divert more of the available FIT funds to that market.

STA attacks the proposals

Predictably, the proposals have attracted criticism from the U.K.’s Solar Trade Association (STA), which has attacked the DECC for "singling out" solar power for the unfair withdrawal of financial support. "The costs of solar power have kept on falling, in large part thanks to the growth and learning in our successful U.K. industry," said STA CEO Paul Barwell. "We had forecast solar could be cheaper than onshore wind by 2018, but for this to happen we needed stable policy sustaining a high-volume market.

"The government is actually moving to slow down solar’s cost reductions towards grid parity."

The proposals would not completely remove state support for large-scale solar, however. Installations over 5 MW would, from April 1 next year, then be able to switch to the new Contracts for Difference (CfD) scheme – a move the STA feels will harm the SMEs that are prevalent throughout the solar sector.

The STA also claimed that the DECC’s explanation that the Levy Control Framework (LCF) has restricted spending is off the mark, calculating that solar accounts for just 5% of the RO budget, or less than $220 million a year. "It does look like the government is seeking to define the energy mix and hiding behind the false excuse of ‘budget management’," added Barwell.

STA’s Head of External Affairs, Leonie Greene, stressed that the association will be pushing back hard against these proposals, with the consultation deadline penciled in for July 7. "We are astonished that the government is effectively proposing to decide for local communities what renewable energy development they can or cannot have. By making solar more difficult to deploy at scale than other renewables, the Secretary of State is proposing to tilt the whole national playing field against solar power investments.

"The government says it wants to see a lot of mid-scale rooftops, but everyone involved in solar knows the U.K. policy framework is inadequate. We have been warning the DECC that they must fix the user-friendly FITs for medium- and large-scale projects for nearly a year."

Finlay Colville, vice president of NPD Solarbuzz, last week told pv magazine that the DECC’s Solar Strategy, while ostensibly positive, failed to set out any binding legislation, warning that future growth in the U.K. solar sector "appears to be contingent on stable policy now and no knee-jerk reactions to the success of the industry over the course of 2014."

With Tuesday’s announcement, it would appear that the U.K.’s large-scale, ground mount sector is already a victim of its own success.