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Solar cuts

Around 15 large solar farms have connected to the UK grid, beating the August 1st deadline for the imposition of the savage cuts of up to 72% to the PV solar Feed-In Tariff (FiT) for projects over 50kW. In all about 60MW of ground-mounted projects made it, according to a Solar Portal review: http://www.solarpowerportal.co.uk/blogs/justhowmanysolarprojectsbeatthefasttrackreview5478/ .

Some of the smaller ones include the 1 MW Ecotricity Fen Farm project in Lincolnshire, the 1.4 MW Wheal Jane park in Truro, and a 7450kW Solar century project at Howbery business park in Oxfordshire. Larger ones include the 5MW Gehrlicher Langage project near Plymouth- 5MW was the limit originally imposed for the FiT. Interestingly, at that time, DECC said it had gone for 5MW since ‘we want to give ourselves a bit more flexibility… to include projects like schools, hospitals and community schemes’. But now, with a new government in power, 5MW is clearly seen as too much for PV.

It was quite a race against time to beat the deadline. EOS Energy installed a £3m 1.15MW farm at a holiday park near Newquay in just 7 weeks. Lark Energy/Lightsource managed to complete two large ones - a 4.9MW farm at Hawton, Notts, and a 4.5MW project at Marston, in Lincolnshire, the latter built in just six weeks. Swindon-based Sunstroom managed to fit 20,000 solar panels on a 36-acre brown-field site in just five weeks.

However that’s about it for now. Solar Century told the Guardian that the cuts means that ‘virtually all investors have withdrawn from financing such developments. There were probably many hundreds lined up for development across the country. They’re pretty much all canceled now because of the fast track review. This type of installation will be a relative rarity for a few years.’ But it was optimistic about the future. ‘They will come back because tariffs and subsidies for solar are a necessary device to create the industry right now but the rate of change of price of solar is on a strong downward trend. Within a few years, the amount of subsidy needed will go down significantly. When that happens, more of these can happen with less cost and become more attractive to investors.’

They also seem popular with local people. For example, the 5 MW solar farm project proposed by Vogt Solar Ltd for land north of Bourn, Cambridgeshire, was the subject of a local community consultation process last year, via an exhibition, website, email and postal questionnaire. Of the 46 people who completed the questionnaire, 41 (89%) were ‘very supportive’ or ‘supportive’ of the plan and 3 (7%) were ‘undecided’, two (4%) were ‘opposed’ or ‘very opposed’. 91% of respondents said they supported the use of renewable energy to help to combat climate change, whilst aiding the security of the UK’s energy supply; and 93% said they supported the use of solar power as a source of renewable energy.

It seems pretty clear that local people were happy with it, and similar projects elsewhere have got strong local support, so why has the government decided to block projects on this scale by cutting the FiT support that they would have attracted? The ostensible reason was that commercial projects on this scale would reduce the money available for domestic scale PV projects- the scheme having had an artificial total cost cap imposed. The FiT support is paid by a small extra on all electricity bills, so it’s up to consumers- would they object where it went, or if there were more schemes so that the cost to them was larger? Arguably you get better value for money with large schemes- and more capacity faster. What’s not to like?

There had also been hopes that community based schemes would prosper. One scheme did make it. Not-for-profit company Sussex-based Ovesco launched a share issue for a proposed 98 kW solar installation on the roof of Lewes’ Harveys Brewery, who leased their roof in exchange for free electricity, which will be used primarily to cool its beer, Sunshine Ale. Any surplus will be sold back to the grid, and the additional revenue used to fund community projects. It just made it before the deadline, so it gets the old full tariff.

The original tariffs were quite generous it’s true. But the cuts were very savage, with the tariffs being reduced from 31.4 - 26.8p/kWh (for 4kW - 5MW) to 19p (50 - 150kW) 15p (150 - 250kW) and 8.5p (250kW - 5MW)

Apologists for the cuts said that they mean there will be a larger number of smaller projects, creating a larger constituency for supporting PV power, but in reality the result seems to have been that the UK PV solar industry has been seriously undermined- there may not be enough well off people able to afford PV to compensate for the loss of these larger projects.

This all seems very odd given that the government says that it sees solar PV as likely to move ahead to become a major renewable source. FiTs help capacity build so that prices fall, but you have to stay the course.

What next? Soon we should hear the results of the full review of the Feed In Tariff system for electricity generation projects- the recent cuts were just the results of the ‘fast track’ review of large ‘solar farm’ PV projects. But the Budget talked of seeking to shave off at least £40m from the FiT programme, so more cuts are likely for PV and maybe other green electricity options. One way to look at it is to see this all as a preliminary to the introduction of the proposed new more competitive-market orientated ‘Contracts for a Difference’ FiT system for renewables, nuclear and Carbon Capture, although whether that will help smaller renewable electricity generating schemes is unclear.

What is clear is that the government is more interested in the short term at least in green heating, and in terms of solar, solar heat collectors, which are a lot cheaper to install than PV. They are to be supported by the £860m Renewable Heat Incentive (RHI) scheme -running, for domestic projects, from next year. As a preliminary to that, for off gas-grid areas, it has launched a £15m ‘Renewable Heat Premium Payment’ scheme- which opened for applications on 1st August- the same day that the PV tariff cut came into force! It’s a grant scheme funded by the government (i.e. the taxpayer), not a Feed In Tariff (with costs passed on to consumers).

DECC says it will support up to 25,000 installations, with grants set at £1,250 for a ground source heat pump; £950 for a biomass boiler; £850 for an air source heat pump; and £300 for solar thermal water heaters. On average, this should work out at about 10% of the total cost of the equipment and installation. Landlords will be encouraged to access the grants to improve their housing stock, with £3m of the £15m set aside for them.

It will be run by the Energy Saving Trust, but it doesn’t cover Northern Ireland: www.energysavingtrust.org.uk/RHPP

Posted by Dave Elliott on August 20, 2011 12:58 AM | Permalink