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DECC proposes solar RO scrapping

solar pv panel

DECC has proposed closing the Renewables Obligation (RO) to 5MW+ solar farm applications from April 2015.

It follows the recent publication of The Solar Strategy document which endorses a move away from large rural solar farms towards populating more commercial rooftops.

For all solar over 5MW, the industry is expected to switch to the new Contracts for Difference (CfD) scheme from next year, but the STA argues that CfDs are far less accessible for the SMEs that are prevalent in the solar sector.

In what it has labelled as ‘an own goal’, the STA says the proposals will cause huge disruption to the solar industry’s speed of cost reduction, should they go through.

There will be no change to the RO for this current year and investments already made by today will receive a one year grace period after the RO closes to 5MW+ solar in April 2015. The proposals will also not affect the Feed-in Tariff for household installations.

STA ceo Paul Barwell said: “The costs of solar power have kept on falling, in large part thanks to the growth and learning in our successful UK industry. We had forecast solar could be cheaper than onshore wind by 2018, but for this to happen we needed stable policy sustaining a high-volume market. The government is actually moving to slow down solar’s cost reductions towards grid parity.

“The industry will be alarmed by these proposals and surprised to be singled out for harsh treatment. It does look like the government is seeking to define the energy mix and hiding behind the false excuse of ‘budget management’.”

The REA echoed the STA’s disappointment that any policy change will create dangerous instability to levels of commercial investment in solar.

It has also highlighted that the government’s counter proposals to raise the FiT threshold to 10MW will raise serious questions over how it will interact with new State Aid rules.

REA chief executive Dr Nina Skorupska said: “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, and the lack of capacity ring-fencing for most technologies compounds that uncertainty. 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.”