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UK Solar boom leads to cuts

By Dave Elliott

PV solar is expanding fast in the UK, with over half a million buildings already using PV, and heading for 3GW in total. In addition to roof-top domestic units, over 120 utility-scale projects recently receiving planning approval, many of which are targeting completion within the next 12 months, according to the new NPD Solarbuzz UK Deal Tracker report. More than 325 solar farms in the MW class were scheduled to be completed mid year, over 60 with installed capacity above 10 MW. And an additional 444 large-scale ground-mounted solar PV farms are currently at various stages of planning:

However, there are worries about visual intrusion, with Energy Minister Greg Barber saying ‘I do not want solar farms to become the new onshore wind. I do not want to see unrestricted growth of solar farms in the British countryside’ and that ‘We don’t want the whole solar sector damaged by a few solar farms that communities don’t want’. Instead, backing a new DECC Solar strategy, he announced plans to turn the Government-owned buildings, as well as factories, supermarkets and car parks, into ‘solar hubs’. He said: ‘There is massive potential to turn our large buildings into power stations and we must seize the opportunity this offers to boost our economy as part of our long term economic plan’. It was estimated that there were 250,000 hectares of south facing commercial rooftops.

In a further initiative, the Dept. for Education is working on ways to improve energy efficiency across the 22,000 schools in England and solar is one option. Education Secretary Michael Gove said: ‘Solar panels are a sensible choice for schools, particularly in terms of the financial benefits they can bring. It is also a great way  for pupils to engage with environmental issues and think about where energy comes from.’

Overall, the Government aims to install 1GW solar PV generating capacity on the Government estate through a major programme led by DECC and Cabinet Office. As part of this, the Government will lead an initiative specifically targeted at England and Wales’ 24,000 schools. It will identify the first 500MW of deployment this year and seek private finance partners to incentivise installation.

The new Strategy follows the “Roadmap to a Brighter Future” which was published last October. Like that, it is very positive, talking of the possibility of getting up to 10GW of PV in place by 2020, and maybe 20GW. It showcases ‘how the UK is at the forefront of innovation in solar PV and its importance in driving further cost reduction, meeting the challenges of balancing the electricity system, securing carbon lifecycle benefits, and identifying new financial models to help households invest’. But as the Roadmap had noted ‘new solar installations will need to be appropriately sited, give proper weight to environmental considerations such as landscape, heritage and local amenity, and provide opportunities for communities to influence decisions that affect them’.

Issues like this obviously worry the likes of the Daily Telegraph, which pointed out that solar farm deployment had expanded from 46 large-scale solar farm projects at the end of March 2012 to 184 at the end of February this year. It noted that further 48 were due to start operating in March and an additional 194 projects have planning permission and are awaiting construction. And, as noted above, many more were envisaged. Its clearly an issue, although the  RSPB and the National Trust have come out in support, saying that, if well planned, solar farms can be better for wildlife than traditional farming and have lent their support to new guidance from the industry.  Even so, DECC has seen fit to propose cutting  Renewables Obligation support levels for large solar farms, its ostensible justification being that, with the cost of solar panels falling, growth had been ‘much stronger than anticipated in government modeling.’

DECC said that, left as it was, large scale PV might reach 5GW by 2017, well above the 4GW maximum by 2020 they thought could be afforded, given the cap on spending on low carbon options designed to protect consumers from undue price rises. So DECC proposed that the Renewables Obligation (RO) for new solar PV capacity above 5MW be closed entirely from 1st April 2015, across England, Wales and Scotland, although with a grace period to protect developers who have already made significant financial commitments. The RO is in any case to close down completely for all new renewable projects from 2017, with the new Contracts for a Difference system taking over, and DECC say this is likely to be a more cost effective path for larger PV.

That may be true, but it’s as yet uncertain and quite complex, and understandably the Solar Trade Association was not pleased with the news of a new review : ‘We are disappointed that DECC is launching another review on the solar industry. Investor confidence and market stability is absolutely essential in order to deliver sustained cost reductions for consumers and a healthy solar industry for UK plc. We are also concerned that any excessively hasty push for cheap solar will come at the cost of achieving quality in the solar farm industry, which is essential to retain public support.

More aggressively, PV installer Solar Century said  ‘Large-scale solar is already significantly cheaper than offshore wind and will be competitive with onshore wind by 2017. In deliberately setting out to strangle the growth of cheaper solar from 2015, Secretary of State Davey can no longer claim that government policy will deliver the most cost-effective mix of technologies by 2020.’

The RO cut reflects the wider issue of overall allocations to renewables. They are constrained by the low carbon  project budget limit, and DECC says that rapid acceleration of solar farm deployment had ‘the potential to affect the financial incentives budget under the Levy Control Framework’ which caps overall spending on green energy. So other projects could suffer. The issue is that, although PV costs are falling, that may not be sufficient to allow unconstrained growth, although of course it has been growth in PV markets around the world that has helped to cut costs. Much of that expansion has been due the Feed-In Tariffs around the EU (including the FiT for small domestic projects in the UK), but the FiTs have all been cut back and, in much of the EU, may soon be replaced by more market orientated auction systems, a bit like the UKs new Contracts for a Difference (CfD), following a new policy proposed by the European Commission.  A version of that is soon to be adopted in Germany. You can see that either as a disaster or as evidence that PV is becoming economically viable.  Be that as it may, domestic-scale PV is unlikely to get any support from the CfD in the UK, mainly just from the FiT system, if that survives, but as DECC says, larger projects can get support from the CfD, although there were none in the first interim CfD round.

Can large PV get its cost down?  DECC says ‘Solar is anticipated to be the first large-scale renewable technology to be able to deploy without financial support at some point in the mid-to-late 2020s’.   If that is true for large projects too, then even before 2020, it could be that the cost of larger expansion may be much less than feared. Or was it that they just wanted to inhibit large, allegedly intrusive, solar farms? But then what happens if large schemes do succeed under the CfD and come in at low cost?

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One comment to UK Solar boom leads to cuts

  1. So the RSPB and National Trust think that solar farms can be better than farming and support it?
    Shame they don’t realise that housing with gardens are also much much better for wildlife than traditional farming – or even eco-farming. But then that would mean people having somewhere to live and that’s not in the remit of the National Trust according to Simon Jenkins.

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