UK: Government considers ending solar export tariffs, ‘serious’ policy gaps must be addressed


Since the introduction of solar PV feed-in tariffs in the U.K. in 2010 – on April Fools Day – the government has gone from generous parent, treating a small kid to chocolate ice cream on a sunny day, to sending solar to the naughty step for taking advantage of the subsidies it was awarded, failing to even mention it in the budget announcements of recent years, and ripping the ice cream away, without prior warning.

With a lack of foresight that has plagued many a country in the roll out of a new renewable subsidy scheme, the government anticipated neither the speed at which the technology – particularly solar – would be adopted, nor the falling equipment prices. Indeed, installed capacity of renewables went from 9.3 GW at the end of 2010, to 38.9 GW by the end of 2017, the majority of which was installed before 2015. Of this, solar accounts for around 12.9 GW.

Thus, when it realized things were getting out of hand, it did what every government in its ‘right mind' would – it pulled the rug out from under solar's feet (while of course continuing to fully fund fossil fuels and nuclear). The first kneejerk reaction happened less than a year after the FIT scheme was introduced in the U.K., and things went from bad to worse for the industry from thereon in.

In its latest address to the industry – a consultation on the FIT scheme – the Government’s Department for Business, Energy and Industrial Strategy (BEIS), formerly the Department of Energy and Climate Change, has recommended, in addition to ending the generation tariffs for solar on March 31, 2019, the removal of export tariffs – meaning homeowners will not be paid for the electricity they supply to the grid. No April Fool’s joke here.

The industry has until September 13 to respond. Specifically, the government has outlined eight questions it is seeking responses to, including its proposal to end the export tariffs; and “How the government can ensure that any budgetary impact from allowing the unlimited replacement of plant can be controlled in an administratively practical manner.”

First reactions

Responding to the news, James Court, Head of Policy & External Affairs at the U.K. Renewable Energy Association (REA) said, “the removal of the ‘export tariff’ for new projects will lead to the truly bizarre situation where consumers who own technologies such as solar will give electricity they don’t consume to the grid for free.”

The Solar Trade Association (STA) added, “With all aspects of the Feed-In Tariff due to close next March, the solar industry & millions of potential investors urgently require clarity on the policy framework going forwards.”

Serious and needless

While STA praised the fact that so much solar had been deployed in the country, which would not have been possible without the FIT, it has criticized the government’s current lack of clarity on what comes next.

“There is real dismay that there is now a serious & needless policy gap between the end of FITs and the start of the new regime,” said CEO, Chris Hewett. “We are therefore asking the Government to work with us and with the industry as a matter of urgency to fill that gap and ensure a smooth transition next March.”

STA is calling for the continuation of export tariffs, maintenance of the mechanism – the Microgeneration Certification Scheme – that ensured high industry standards, and the removal of certain tax anomalies. It adds that new policies to boost the domestic market need to be put in place, like Green Mortgages and the expansion of interest free loans.

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Furthermore, the move to creating smart homes needs to be adequately supported. While battery storage is becoming increasingly common in the U.K. – in an interview with pv magazine (out soon), Signe Antvorskov Krag, Global Development Leader IKEA Home Solar Business said that storage is a really good value proposition in the U.K., while “pretty much every second or third [Ikea] solar system is sold with storage” – there are still a number of challenges to overcome on the path to creating a truly smart metering regime, flexible power markets and an attractive PPA landscape.

The REA had similar ideas on how to proceed. “Post-subsidy could be a reality, but in an energy market where nothing, not even gas power stations, can be built without government support, it is unrealistic to expect consumers, businesses or developers to continue installing small scale generation. This could be achieved by tax incentives, market enablers, and planning or building regulations, but we are currently left in an unnecessary policy vacuum without any firm proposals put forward by Government,” read its statement.

 Subsidy-free not the answer, yet

Last September, Renewable Energy Developer, Anesco completed the U.K.’s first subsidy-free solar PV project, the 10 MW Clayhill Solar Farm, which is co-located with a 6 MW battery storage unit.

Despite the undoubted positive impact subsidy-free solar could have in the country, the STA was skeptical that the Anesco project could act as a beachhead for further low-cost solar. “We absolutely applaud Anesco but government shouldn’t then assume the industry is away – it isn’t,” a STA spokesperson told the Financial Times at the time. “It is only going to be exceptional projects that are built subsidy free. What we are asking for is a level playing field for solar power,” they added.

Anesco’s executive chairman, Steve Shine, further admitted at the time that the Clayhill farm would not pay with solar by itself at the moment – the storage support is key to ensuring its viability because by providing grid balancing services to the National Grid it can receive the extra payments offered to electricity generators that help to ensure high voltage transmission systems remain stable and absorb excess power when solar and wind load the grid.

A U.K. company involved in storage projects also recently told pv magazine that it does not believe a subsidy-free strategy is currently economic in the U.K.

Solar shines

As if to raise a middle finger to the repeated knockbacks the industry has received, and on the back of the current heatwave being experienced in the U.K, between June 21-28, solar PV saw over 75 GWh of energy generated, and created over 8 GW of power each day, for eight consecutive days – a new record. Sunday, June 24 shone in particular, with solar PV generating over 27% of electricity for the U.K. grid for around one hour.

Meanwhile, reflecting its rapidly changing energy landscape, the country last week surpassed 1,000 hours without using coal this year, up from 624 hours in the whole of 2017, and just 210 hours in 2016.

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