DECC’s solar shake-up: Industry reaction

Earlier today (2 October), the Department for Energy and Climate Change (DECC) announced it would be removing large-scale solar farms from the existing Renewables Obligation (RO) initiative. It did, however, sweeten the deal somewhat by also announcing it would be adding almost £100m to the Contracts for Difference (CfD) budget.

— Read the full announcement and more about the RO scheme here —

The move to bar solar farms of more than 5MW from the RO process has prompted a sharp response from the industry, with edie hearing from the Solar Trade Association (STA), Renewable Energy Association (REA) and Friends of the Earth among others.

Solar Trade Association

The STA’s chief executive Paul Barwell said: “Solar has been the rising star in the Coalition’s renewable energy programme and has been championed recently by the Prime Minister at the UN and by Ministers at conference.

“Why is the UK Government putting this industry’s incredible achievements on solar power at risk? To curtail its growth now is just perverse and unjustified on budgetary grounds – solar has only consumed around 1% of the Renewables Obligation budget.

“This is not a good outcome for consumers either. Why remove support for solar power when it could be the first low carbon power source to become subsidy-free by the end of this decade? British solar needs a stable policy framework to retain its growth to drive down costs so consumers see a direct reduction in their future electricity bills.

The STA has launched an online petition backed by Greenpeace, Friends of the Earth, 10:10 and the Green Party, and has also written an open letter to the Prime Minister; claiming that solar power could be cheaper than fossil fuels in the next Parliament – but only with ‘consistent and stable policies’ from Government. 

Solarcentury

Solarcentury’s head of public affairs Seb Berry added: “Earlier this week, on the Conservative Party conference fringe, Ministers were busy talking up the contribution from solar and promising “long-term certainty” for investors in all renewables.

“Today’s announcements however, do little to undo the disruption and uncertainty of the last five months, providing at best a very marginal boost to roof-top solar to 2020 while confirming a premature end to the solar Renewables Obligation for large-scale projects. 

“It’s baffling that the government continues to justify these decisions in ‘value-for-money’ terms, when everyone knows that they are being driven by the coalition’s preference for ring-fencing spend on the much more expensive option of off-shore wind, at a time when by contrast spending on the solar RO amounts to just over 1% of the total Levy Control Framework budget.”

Friends of the Earth

Friends of the Earth renewable energy campaigner Alasdair Cameron said: “Solar could be cheaper than fossil fuels in just a few years, but it needs a little more help from Government to get it there. Failure to invest now will mean a huge missed opportunity for the UK economy.

“The new Contracts will only benefit the existing energy establishment of big companies and developers. Instead of throwing up yet more barriers for small businesses and community groups, Ministers should be making it easier for everyone to reap the benefits of solar energy.”

Last month Friends of the Earth gave its backing to a Judicial Review against the Government from four of the UK’s biggest solar firms, claiming that the proposed withdrawal of support for solar through the Renewables Obligation (RO) scheme from Energy Secretary Ed Davey was ‘unlawful’.

Renewable Energy Association

The REA was similarly scathing, adding: “This Government has missed its last chance to make the new Contracts for Difference (CfD) scheme a major driver of jobs and growth for the UK’s independent renewable power generators.

The REA laid its proposals to improve the accessibility of the scheme for renewable energy SMEs and independents and deliver better value for money for bill-payers:

• Minima for all renewable technologies in the CfD scheme (currently only available for wave and tidal stream projects) so that every technology sector has the opportunity to invest in job creation, innovation, supply chains, skills development and cost reduction,
• Quarterly rather than annual allocation rounds, so that unsuccessful bidders do not face an investment hiatus that could lead to closures and job losses,
• Workable proposals for biomass CHP projects, to allow projects to continue without unpractical and burdensome regulations regarding heat markets,
• Reasonable budget allocation for biomass power and the more established technologies (such as onshore wind, solar power and waste to energy) to ensure value-for-money for the consumer.

Contracts for Difference

The CfD shake-up will see the expanded budget split into two pots, with Pot 1 offering £65m for ‘established technologies’, such as solar power, onshore wind, energy-from-waste, landfill gas and sewage gas. Pot 2 offers £235m over the next four years to less-established technologies such as offshore wind, wave, tidal stream, anaerobic digestion (AD), and geothermal.

But the STA has downplayed the benefits of a beefed-up CfD scheme, with Barwell pointing out: “This is not a policy mechanism that has been designed to deliver the stable market growth that solar power needs to bring down costs, nor has it been designed for new entrants and SMEs despite the urgent need for new players in the power industry.

“We have repeatedly said to DECC they need to adapt these policies or they will remove rather than increase competition in the energy sector. Smaller solar companies are set to be hit very hard by the design of CfDs because unlike the other technologies large scale solar alone will not have the security of the RO. The rationale for constructing a policy framework that disadvantages solar power is hard to fathom.”

Brad Allen