EY blasts 'absurd' renewables policy
The UK Government's plan to tackle climate change whilst also reducing subsidy support for solar and onshore wind, is 'somewhat absurd', according to global consultancy EY (formerly Ernst & Young).
The firm’s latest Renewable energy country attractiveness index (RECAI) warned that the Conservative's election victory could prove a ‘double edged sword’ for the renewables industry.
“Pre-election policy uncertainty is now gone...but [the Government] is apparently ignoring market signals that onshore wind and solar PV can deliver affordable and dispatchable energy,” said the report.
“This is even more confusing given strong evidence that costs have further to fall.”
A recent report from the UK’s Onshore Wind Cost Reduction Taskforce projects an average reduction of 22% on today’s costs, taking onshore wind energy prices below gas by 2020. Likewise, a recent STA report predicted that UK solar power could match gas wholesale prices by 2018.
However, these projections both rely on stable policy support – something which the new Government has shown no sign of offering.
Instead, new Energy Secretary Amber Rudd recently confirmed that plans to stop subsidies for onshore wind farms, were ‘top of her agenda’ at Decc. The outgoing coalition Government also ended the Renewables Obligation scheme for large-scale solar farms back in April.
The solar industry has also claimed the new Contracts for Difference mechanism penalises solar by forcing it to compete on price with more mature technologies. As a result, no large-scale solar farms are scheduled to be built in the UK in 2015/16.
The EY report concludes: “Only time will tell whether [the Government] realizes that simultaneously chasing a climate change target while abandoning the most cost-competitive renewable energy technologies is somewhat absurd.”
Reacting to the newly hostile climate, the Renewable Energy Association said it wanted to help small solar firms become more competitive in the CfD auction and create a new focus on smaller-scale community-owned renewables.
Speaking at a renewable energy conference in London yesterday, REA chief executive Dr Nina Skorupska said: "My message to Amber Rudd – and I hope to see her very soon – is that we want to work more closely with this Government to enable a roadmap for grid parity to be clearly understood.
"We want to promote the participation of SME’s in the CfD auction. Last year, there were 18 consultations on understanding CfDs. We’ve had that first auction happen, but all in all the amount of effort and work for SMEs to stay on top of it was very tricky.
"It’s also really key in the next months that we unlock the commercial and public sector rooftops. The tide is changing in terms of what the impact of having solar on buildings represents, but we’re still not seeing it deployed fast enough in volume."
A report from the STA, released yesterday, also found that the majority of developers who were responsible for adding more than 1GW to the grid in the past six months, have said they will be focusing on smaller projects in the short-term.
The onshore wind sector has been less vocal about its plans moving forward, as the final announcement on subsidies and planning permission has yet to be made.