UK: Scotland carries flag for solar as FIT changes slow march to grid parity

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The U.K.’s solar-coaster has taken another undulating turn this week with the news that the Scottish Government will retain portions of the previous solar policy that are set to be scrapped in England and Wales.

Unlike the proposals outlined by the Department of Energy and Climate Change (DECC) for England and Wales, Scotland’s government has said it will retain the ‘grandfathering’ guarantee for solar farms constructed under the Renewable Obligation (RO) scheme – thereby ring-fencing a level of investment guarantee for the solar developer and plant owner.

The grandfathering guarantee ensures that the level of subsidy support for unit of electricity generated remains the same as first agreed once a solar plant has been built and connected. This guarantee delivers assurances to solar investors that their calculated returns under the RO will not reduce – but DECC has proposed to remove this in England and Wales.

In Scotland, where Scottish ministers get to decide on matters such as these, the government has chosen to retain the guarantee for "clarity and certainty", said Scottish Energy Minister Fergus Ewing. Scotland will also not be reviewing the RO banding prior to its closure. South of the border, DECC has proposed that even this will be looked at before next April.

Praising the Scottish government’s stance, STA Scotland chairman John Forster said: "This shows that the Scottish government is fully committed to solar providing as much as possible of its 100% renewables target for Scotland.

"Solar projects in Scotland now know what level of support they are going to get, and that they will get it for the full 20 years. It won’t be possible to cut support for Scottish projects down the line in, for example, year 15 of 20."

Beyond parity

Associations angered by DECC’s proposed subsidy cuts – which include reducing the FIT by as much as 87% by January 2016 and removing the pre-accreditation process for small-scale solar farms in October – have long argued that these changes will trip solar at the final hurdle before it reaches grid parity.

However, in an interview with Bloomberg, National Grid Finance Director Andrew Bonfield has said that, even with these subsidy withdrawals, solar in the U.K. will reach cost parity with conventional sources within 18 months.

"Given the falling costs of solar panels and better penetration and manufacturing, people in our organization are estimating parity with other sources of generation in 18 to 24 months," Bonfield told Bloomberg.

He added that solar+storage will soon deliver the "sweet spot" for energy, but said that battery costs do need to fall further for that to happen.

James Court, head of external affairs at the U.K.’s Renewable Energy Association (REA), told pv magazine that despite the National Grid’s confidence in solar’s ability to lower costs, "there is no doubt that the recent moves against the FIT will slow down the industry’s ability to get to cost parity."

He continued: "We will see a loss of skills and expertise, as well as the domestic supply chain, which has been so instrumental to the rapid cost reductions in the U.K."

Court added that the U.K. will now likely fall behind other nations in Europe on the route to grid parity, warning that – while jobs and the industry will recover at some point in the future – "this is a huge set back."

Last week the REA calculated that at least 15,000 jobs will be lost in the solar industry once the proposed cuts are enacted – wiping millions of pounds from the coffers of the HM Treasury and actually proving more costly to the government in the long run than if no cuts were enacted.