Large scale PV moribund in UK but unsubsidized projects offer hope

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The latest statistics from the Department for Business, Energy and Industrial Strategy (BEIS) are unequivocal: in seven months not one large scale PV power plant – defined as ranging from 5-25 MW in generation capacity – has been connected to the grid in the U.K. Only 8 MW or so of that scale of project was added in the previous five months, with the last sizable chunk of project capacity added under the expired Renewables Obligation being the 340 MW deployed between January 2017 and March 2018.

For projects larger than 25 MW the picture is even gloomier, with zero growth for 13 months. January 2017 to February 2018 saw only 120 MW of such large scale project capacity added.

Solar excluded from Contracts for Difference scheme

The reason for the collapse is that unlike most other advanced economies – and mature solar markets – the United Kingdom never implemented a transition for large scale solar from FIT and renewable energy obligation incentives to technology-neutral auctions. Such a changeover has been overseen in major European countries including Germany, France, Spain and Italy, as well as in smaller energy markets such as Denmark, Ukraine and Portugal. Only one other European nation – Czechia – is planning to exclude PV from future renewable energy auctions, due to anti-solar sentiment in recent years.

The Contracts for Difference (CfD) scheme, which the U.K. government launched in 2015 and which is now approaching its third round, still excludes solar and onshore wind.

BEIS divides renewable energy technologies into three pots. Pot 1 concerns ‘established technologies’ and includes solar and onshore wind, Pot 2 is for ‘less established technologies’ including, oddly, offshore wind as well as biomass CHP (combined heat and power). Pot 3 is solely for biomass conversion.

“Pot 1 has not had an auction for years now as the Conservative party manifesto stated there would be no government support for onshore wind,” a spokesperson for U.K. trade body the Solar Trade Association (STA) told pv magazine. “Unfortunately solar PV sits in the same pot and has become caught up in this political decision.” The government’s position for onshore wind stems largely from the opposition of voters in mainly Conservative rural shires of England to what are perceived as unsightly wind turbines in the countryside.

If included, solar would be highly competitive with offshore wind, the STA added. “The evidence is clear that solar PV and onshore wind are Britain’s lowest-cost electricity generation technologies and their continued exclusion from the CfD mechanism is holding back power sector decarbonization and driving up electricity prices for households and businesses,” said Nicholas Gall, senior policy analyst at the STA. “We urge the government to heed the recommendations of the Committee on Climate Change: Stop picking winners, and allow onshore renewables to compete with offshore wind on a level playing field.

BEIS: Unsubsidized solar is viable

Asked by pv magazine why solar and onshore wind are excluded from the CfD regime despite their low costs, BEIS press officer Fred Maynard responded: “The government’s aim is to move towards a future where ‘green’ electricity has the potential to be delivered without public subsidy. We are beginning to see signs that some limited-scale onshore wind and solar projects can be deployed without the need for public subsidy. Several solar projects are currently deploying without subsidy from government and we expect others may follow.”

Maynard added, solar energy has not been excluded from future CfD rounds, for which no long term decisions have been taken.

Asked why the U.K. does not favor a technology-neutral approach, Maynard said the government believes it right to focus resources on bringing forward less established technologies which could have a significant long term role in the energy mix, and which display significant potential for cost reductions. “The cost of offshore wind has come down significantly in recent years thanks mainly to the competitive auction process within the CfD scheme,” Maynard said. “However, the government believes that further reductions can be secured through future allocation rounds and has committed to delivering up to 30 GW of offshore wind by 2030 if prices come down.”

Maynard added, the U.K. is surpassing historic projections for solar deployment. “In 2013 we estimated that solar capacity would reach 10-12 GW by 2020 but [the] latest figures indicate that we now have [more than] 13 GW of solar capacity installed in the U.K. – enough to power [more than] 3 million U.K. homes. This is more than we need to meet this technology’s expected contribution to our 2020 renewable energy target.”

Big hopes for corporate PPAs

According to the STA, large scale solar is not entirely dead as 250-400 MW of corporate PPA-driven solar projects – some integrating storage – may see the light of the day this year, with more expected from 2020 onward.

If confirmed, those numbers could lead to the deployment of 650 MW to 1 GW of new solar capacity this year and mark the beginning of a resurgence for the U.K. solar market up to 2023, when cumulative capacity could reach 17-20 GW, said the trade body. That would compare with only 285.6 MW last year and 943.4 MW in 2017 after the bumper 2.18 GW added in 2016.

The first four months of the year saw 123.6 MW of newly deployed solar capacity, down from 152.1 MW in the same period of last year. A majority of this year’s additions, however, were for residential PV systems not exceeding 4 kW in capacity, with such arrays adding up to 53.9 MW of the total. Installations with a capacity of 4-10 kW totaled 21 MW with larger installations (10-50 kW) achieving 48.5 MW.

A million PV systems

Despite the current slowdown, the U.K. added its millionth PV system to the grid between March and April. BEIS reported, at the end of April a cumulative 1,002,456 solar systems with a combined capacity of 13,243.7 MW had been connected to the grid. Of those, installations with a capacity of up to 5 MW accounted for 7.31 GW of the total with the remaining 5.92 GW represented by larger plants.