Some 900 MW of solar projects that hold, or have applied for planning permission could be set to compete for Contracts for Difference (CfD) subsidies when the U.K. brings solar back in from the cold next year.
The government last month announced plans to include established, ‘Pot 1’ clean energy technologies in a generation capacity auction next year, marking the inclusion of solar and onshore wind in the subsidy bidding process for the first time since 2015. The technologies defined as Pot 1 are those which have demonstrated market maturity and the steepest cost reductions.
The Department for Business, Energy and Industrial Strategy (BEIS) has been unable to estimate how much ‘low-carbon’ generation capacity – potentially still including polluting coal-to-biomass facilities – it expects will compete for top-up payments. Announcing the new capacity auction, BEIS also opened a consultation about potential changes to the CfD regime which it said may affect the desire of developers to apply for payments.
However Cornwall Insight, an energy and water industry analyst based in Norwich, in the east of England, said 900 MW of solar project capacity is listed in its Renewable Pipeline tracker and could take part in the scramble for incentives. Under the CfD regime as it stands, developers bid a ‘strike price’ maximum tariff figure which they receive for the energy they generate, minus the day-ahead, hourly wholesale electricity price. The resulting top-up incentive is paid on top of whatever developers receive for the commercial sale of the energy concerned.
Cornwall Insight told pv magazine its Renewable Pipeline tracker includes only projects which have applied for or secured planning permission and it estimates the U.K. has a larger solar pipeline of up to 13 GW, as developers typically prioritize attaining grid connections over planning permits.
Numerous solar projects planned on a merchant, subsidy-free basis may opt to also compete for CfD payments after the government ended what amounted to a ban on solar subsidies.
Most of the suggested amendments to the CfD system appear unlikely to deter solar developers from applying for subsidy although any decision to extend the requirement to hold a local supply chain strategy to projects with a capacity of less than 300 MW may prove unwelcome. The consultation period over changes to the CfD rules is due to end on May 22.
The majority of the solar projects in the Cornwall Insight tracker are in England and Wales, with an emphasis on the English South East, where the 350 MW Cleve Hill Solar Farm is planned.
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