Investor confidence to take blow with proposal to end guaranteed level of support through lifetime of large-scale projects ---STA calls for ‘bridging strategy ---Domestic solar on homes not affected by changes

The Department of Energy and Climate Change has today published proposals [1] to reduce Renewables Obligation support for solar on both roofs and in solar farms.

The proposals cover both the Renewables Obligation for bigger projects, and changes to rules on the Feed-in Tariff for smaller projects.

The Renewables Obligation, which currently supports rooftop and solar farm projects between 1MW and 5MW in size, is according to these plans set out today to be closed from 1 April 2016, as well as a planned reduction in levels of support for projects currently in the pipeline. Critically, DECC is also proposing to end ‘grandfathering within the scheme from now on, the guarantee that a certain level of subsidy will be provided throughout the lifetime of a solar farm once built.

This follows a similar move last year which already excluded solar farms of more than 5MW in size - about 25 acres - from receiving support from the scheme as of 1 April 2015.

The Solar Trade Associations Head of External Affairs Leonie Greene commented:

"This is damaging for big solar rooftops as well as solar farms, both very cost-effective ways of generating solar power. This contrasts with repeated commitments from Government to boost the commercial solar rooftop market."

"The possible removal going forwards of the guarantee on a set level of support throughout a projects lifetime once built is a real blow to investor confidence."

"There is no pledge in the Conservative manifesto about cutting support for solar, so we are disappointed by this move. Solar is the nations most popular form of energy, as the governments own opinion polls have shown."

"We recognise that Government wants to shift the emphasis to larger solar rooftops, but we have explained to the Department that these are just 5% of the UK market. More work is needed urgently to unlock larger solar roofs. There is a danger if Government pulls the rug on solar farms too early, the market will have nowhere to go. This could be further compounded by changes to the Contracts for Difference auctions. What we need is a bridging strategy and we are very keen to work with DECC to achieve that."

"We also regret this move because solar farms are close to competitiveness with new gas generation and they account for a very small proportion of expenditure on the Renewables Obligation. We're hearing a lot of big figures from Government, but they should know it is just a few quid more on energy bills to deliver nothing less than a solar power revolution in the UK. We think the British public would support that. We're very close, but we're not there yet. Support for solar under the Renewables Obligation currently costs just £3 per year on each household bill, and solar on makes up only 6% of the Renewables Obligation budget."

The grace periods put forward for projects currently in pipeline is similar to that for the previous closure.

With regards to the Feed-in Tariff, which supports small-scale rooftop and solar farms, the proposal is to remove ‘pre-accreditation to a fixed tariff level, meaning that complex community and commercial projects that can take longer to complete could have to deal with constantly reducing tariff levels between the start and finish of the project.

The Solar Trade Associations Head of External Affairs Leonie Greene commented:

"Again, the removal of the ability to pre-accredit a project and lock in at a set level of support, will make it harder to do both commercial rooftop and community solar schemes. We understood that DECC wants to support growth in these areas so well be asking them to think again."

"However it is important to note that this is not an issue for residential or domestic solar on peoples homes - these are quick to install and do not depend on pre-accreditation."

The Government has also committed to give visibility with regards its low carbon energy budget as a whole, the Levy Control Framework, beyond 2020 and to set out its plans Contracts for Difference, its new subsidy support scheme, in the autumn.

This follows the Solar Trade Associations publication last month of its ‘Solar Independence Plan for Britain report [2], a fully costed proposal which sets out how the government can double the amount of solar and get solar as cheap as fossil fuel electricity by 2020, all for a modest amount of extra funds.

Stakeholders such as the Solar Trade Association can now feed back to the government as part of a public consultation process.