Changes to the solar industry’s funding will force solar to compete against other renewable energy sources. Is this a bad thing? With your help Karl Mathiesen investigates.
Join the debate. Post your views in the comments below, email karl.mathiesen.freelance@guardian.co.uk or tweet @karlmathiesen
5.53pm BST
This is late, but relevant reaction from Lightsource Renewable Energy‘s CEO Nick Boyle. He does not buy into the idea that the government wants to stop solar farms spreading in the countryside.
Firstly it is important to understand that the proposed changes announced today are nothing whatsoever about the Government wanting to prevent solar farm deployment, as they are well aware that solar remains the most popular of all energy technologies. We are at the cusp of a solar revolution that will deliver much needed energy security to Britain and government recognise that the large scale application of solar is currently the most efficient and cost effective form of electricity generation that we have.
"Following a meeting with the Secretary of State Ed Davey today, we are considering our position as clearly the challenge for us and the entire solar industry in the UK is within the detail of the CFD regime itself; which solar is now being forced into and more specifically, how this system is going to be implemented for solar; which clearly has different considerations to other technologies.
5.48pm BST
Our question today was probably misguided. The UK has undertaken to meet certain renewable targets by 2020, so no matter what Decc does with the solar industry (within reason) the amount of renewables will continue to increase to this level.
What is more interesting is whether these proposals will save money, as Decc is claiming. On the surface it seems unworkable to drive investment from an industry that has reduced its costs by up to 30% in the past two years. Especially when the Tories also plan to curb onshore wind – currently the cheapest form of renewable electricity.
5.03pm BST
The cost of solar is in free fall, according to Clean Technica pic.twitter.com/U5TrVhx1pF
4.41pm BST
@TrillionFund If you want cost reductions, set a stable degression. Like the RO already had before DECC threw a grenade at it today.
Third DECC meeting today, this time lots of industry round table. Glad message CfDs don’t work for SME solar being heard! Need major work!
Another review of solar subsidies makes solar industry wonder what’s going on. Existing policy mechanisms bypassed http://t.co/yZPKm5jjpv
Let’s be clear though that this is not the end of solar, in the big picture it’s just the beginning. @BBCNews @guardianeco @BusinessGreen
@KarlMathiesen Betting against solar now like betting against mobiles in 1990 cause they were a bit clunky.. technology racing ahead.
4.36pm BST
It’s really worthwhile reading James Murray’s blog on Business Green. He says the industry was in danger of blowing the Levy Control Framework (LCF). This would raise bills for consumers.
"The drastic reduction in the cost of solar technologies – by some industry estimates solar farm costs have fallen over 30 per cent in two years – coupled with the breakneck speed with which solar panels can be installed presents a unique challenge to policymakers. A challenge Whitehall is still yet to get to grips with.
"Ministers have a responsibility to retain a high degree of budget control, not least because the LCF is not a bottomless pit of money, it is paid for through the energy bills of households and businesses and as such excessive deployment of subsidised projects could and would lead to higher bills for the public."
@KarlMathiesen Not the whole LCF, but gov sources maintain there are valid concerns solar budget could have been broken without action.
4.06pm BST
The Tory agenda on solar farms is fairly clear. Like onshore wind, they see them as scar on the landscape. Here are some past statements from ministers.
3.49pm BST
Robert Goss, managing director of Conergy UK, who participated on DECC’s solar strategy taskforce, says this is not the disaster many in the solar industry think.
Lets wait on the results of the consultation but DECCs proposals are more of a gradual recalibration than an earthquake for British solar. Rather than disappearing overnight, we would just select sites in a different way. Many large projects would still be built under the CFDs, and ROCs would remain in force in Northern Ireland, where development would become very competitive. In other parts of the UK there would be a downsizing of the scale of many new solar farms, which is politically attractive, but offers encouragement for sites that have been neglected over the last few months.
Will solar subsidy changes mean less renewable energy in the UK?
Not at all.
3.45pm BST
3.26pm BST
Decc’s justification for the proposals today does not seem to bear up under investigation. The department argues that because the solar industry has expanded much faster than expected, it is drawing more funding than Decc budgeted for. Okay so far.
But the policy proposal then says: "If spend in one area of the Levy Control Framework (LCF) increases unsustainably, it will increase pressure on bills unless it is matched by cost reductions elsewhere."
Ensuring value for money and maintaining investment in #renewable #energy, https://t.co/J2dQl7YdZQ
2.34pm BST
The Telegraph’s triumphant headline on this story reads: "End to solar farm blight as subsidy scheme is scrapped". Leaving aside the insight into the politics of this policy for a moment, the inference on the future of solar farms is incorrect.
Next year these projects will need to compete for contracts for difference (CfDs). But as yet, Decc has not finalised how the auctions for these will work. There has been an indication that solar will be treated as a ‘mature technology’. This means it will compete against the cheapest renewable energy source, onshore wind.
"Despite the threat of RO support being removed completely in April 2015, the large-scale solar sector in UK is predicted to become Europes largest in 2014, with some analysts predicting that the planned ROC closure for >5MW could trigger as much as 4GW of solar farms to be installed from now until April 2015."
2.17pm BST
Renewables investors are less strident than those in the solar industry about today’s changes. Rebecca O’Connor, director of Trillion Fund said:
"Removing subsidies, as the Government is planning by closing the Renewable Obligation for projects over 5MW from next April, is never going to be painless and it will be scary times for those developers facing lower returns than they have calculated.
"But we have been saying for some time that solar, which is plummeting in cost, looks set to compete on its own two feet with fossil fuels. It looks like we will find out if this is the case sooner rather than later. The important thing is that the transition away from subsidies is done fairly."
"Solar power is not only a new, clean energy source supported by 85% of the UK public, but it’s one that’s being invested in too. The key to diversifying our energy supply, keeping prices down and cutting emissions is ensuring stability for this growing industry – not stop start policy changes. Ultimately investment will continue, and flow into on roof solar, such is the demand we’re seeing, but really – what kind of Government would stop the most democratic, clean energy source from thriving?
We must separate decisions on energy from political whims once and for all. If politicians cannot be trusted to not put winning short term votes ahead of sensible energy policy then we should vote to take such decisions away from them. Similar to Gordon Browns transfer of interest rates policy to the Bank of England, renewable energy tariff decisions should be dealt with by a non-political body. The British public has moved on, they’re looking for win win investments and old school Government thinking is being left behind."
2.11pm BST
This is Tory nonsense.
They pretend to be diverting funds away from large ground mounted systems towards commercial roofs and community systems BUT commercial roofs in the UK, for the most part, don’t work. Landlords worry that the mounting system will invalidate their roof warranty and most new buildings aren’t structurally strong enough to hold their weight. Plus you still have significant grid capacity issues. Its a small part of the current UK solar market for a reason.
I have heard similar things from others on the subject of shifting the emphasis towards rooftop solar. Ben Lewis, from property agents GVA, says there is serious concern from investors. Where the owner of a building wants to install solar on their roof, there will be no complication. But when a tenant is involved there can be all sorts of complications. Lewis says this could seriously hamper the shift from ground to roof mounted arrays.
1.28pm BST
Large scale solar PV is deploying much faster than previously expected. While this is good news, we are concerned about the impact this speed of deployment under the RO could have on the Levy Control Framework (LCF) which sets annual limits on the overall cost of DECCs levy-funded policies. If spend in one area of the LCF increases unsustainably, it will increase pressure on bills unless it is matched by cost reductions elsewhere.
We propose to achieve this by closing the RO across Great Britain12 to new solar PV generating stations, both ground- and building-mounted, above 5MW from 1 April 2015.
In other words: The industry has been more successful than expected. This is partly a result of its ability to reduce the cost of its electricity. There are now more than 250 solar farms in the UK. The government is concerned about the impact this is having on the budget that controls Decc subsidies.
1.15pm BST
Greenpeace UK chief scientist Doug Parr said:
Solar is hugely popular in the UK, costs are falling faster than for any other energy source, and the latest technology is on track to beat nuclear on price. Sowing uncertainty for a key source of clean, homegrown energy, as ministers are doing, makes no economic, political, or strategic sense.
Far from hitting the big energy companies this compulsive policy tinkering sucks confidence out of independent generation and leaves the future of community solar projects up in the air yet independent producers are our best hope to challenge the big sixs stranglehold on the market."
Government should be doing all that it can to support solar power at all scales not making it more difficult… Ministers claims that solar farms are blighting our countryside are wildly overstated. Such installations typically take up less than 5% of the land they are on, leaving huge scope to develop protected habitats to support local wildlife and plant life.
This review shows that the Governments renewables strategy is in some disarray and struggling to catch up with developments.
Every time a renewable energy technology starts to do well it gets hit by a wave of Government uncertainty, which pushes up costs and threatens jobs and investment.
12.50pm BST
Seb Berry, Solarcenturys head of public affairs said " the outlook [for the industry] beyond the end of this financial year is extremely uncertain".
"Today’s announcement is unnecessary and totally at odds with the government’s desire to reduce the cost to energy bill payers of delivering the 2020 renewable energy target. Following close behind recent unhelpful media coverage of onshore wind policy, this policy proposal will undermine investor confidence in the entire UK renewable energy sector, by removing at a stroke the short and medium-term policy certainty required for major project investments. It is very surprising that such a deeply damaging policy proposal has been cleared by the Treasury.
It is equally surprising that the government is trying justify this proposal on cost grounds. 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."
"This will undermine growth, investment and jobs in a sector which is helping to introduce more competition and new players into the energy market.
"This decision will bring further instability and uncertainty to investors, and we will have to reconsider our portfolio of investments as a result.
Clear, stable policy attracts investment, creates jobs and drives growth and cost reductions in renewable energy technologies. However, there is not much clarity or stability on show today. The piecemeal approach to the CfD scheme leaves a lot of questions still unanswered… Without knowing what DECC intends to do in terms of setting out the budget, making sense of CfD proposals is like trying to complete a jigsaw puzzle without seeing the picture on the lid.
Solar power meanwhile is subjected yet again to devastating instability. Government must ensure that policy drives and rewards technology cost reductions with a stable trajectory of gradually declining financial support, not the cliff edge the Government is proposing for solar.
12.22pm BST
The changes to the solar energy subsidies will shift large scale solar projects out of the Renewables Obligation scheme. Instead they will compete for government Contracts for Difference. Here’s a quick guide to these terms.
The Renewable Obligation system was introduced in 2002, when the wholesale price of renewable resources was comparably more expensive than fossil fuels. Throughout the last decade and continuing on this decade oil and gas prices have been going up, while the technology for renewable sources has improved and the output price has fallen. Therefore as part of the EMR, the government had to consider another mechanism that wouldnt provide the generators with a super-normal windfall going forward, as it is possible under the current framework.
12.06pm BST
In a nutshell: the UK Government is looking at allowing Communities to invest in BIGGER solar arrays but, at the… http://t.co/T5mbma7UGr
The secret of success in UK renewables? Don’t succeed. http://t.co/RXJMUev33o via @businessgreen
We don’t accept budget arguments. Solar 5% RO budget. Even if large-scale capacity doubles only 9% RO budget. Seems anti-solar.
V odd & just plain wrong for DECC to be using "cost" as excuse to kick >5MW #solar out RO.Sorry but that argument just doesnt wash any more
11.52am BST
Big solar farms will no longer receive government subsidies under proposals released today. Instead, the government will expand support for rooftop solar and community-owned solar projects.
Fiona Harvey reports for the Guardian:
Installations of photovoltaic equipment amounting to 5MW and above will no longer receive payments under the renewables obligation, as they currently do, under the proposals, expected to take effect from next April.
After that, solar farms would receive support under the contracts for difference scheme, which was brought in under the electricity market reforms for large-scale low-carbon power. This would mean they would have to compete for cash with other forms of renewable energy, such as onshore wind and energy from waste, which the government classes as established.