UK distributed power generation market could decline by 2019

The U.K. government’s controversial decision to scale-back its Renewable Obligation Certificate (ROC) scheme in favor of the Contracts for Difference (CfD) program will trigger a significant decline in investment in the country’s distributed power generation market, says research firm GlobalData.

Investment in the distributed generation (DG) sector – comprising solar PV, wind and combined heat and power (CHP) – will experience a sharp decline, from close to $2.5 billion last year to under $1 billion by 2019, say GlobalData analysts.

In its latest report, Policy Amendments Leave the U.K. Distributed Power Generation Market in Disarray, GlobalData argues that investment in DG will fluctuate over the remainder of the year and into 2015, but will begin falling from early 2016.

The report suggests that the expiration of the ROC scheme in March 2017 (although solar PV will no longer benefit from the policy after March next year) and the introduction next April of the CfD program will limit the amount of government funding available for each DG power sector. Clean energy schemes will become less attractive to investors, leading to a noticeable decline in funding.

"We expect these excessive and overlapping policies to create chaos in the U.K.’s solar PV DG market in particular," warned GlobalData project manager for alternative energy, Ankit Mathur. "As part of its solar PV strategy, the U.K. government aims to boost the small and medium-sized commercial solar PV DG sector by encouraging rooftop installations on government properties, with a target of installing 1 GW of capacity by 2020.

"However, only 75% of this target is likely to be achieved."

Despite this ostensibly gloomy outlook for the U.K.’s solar sector, GlobalData belives that cumulate installed PV capacity will enjoy moderate growth beyond 2017, reaching approximately 7 GW capacity by 2019.