Subsidy cuts begin to bite hard for UK solar power

15 May 2017 16:56 Source:ICIS

Signs that cuts to subsidies for solar capacity above 5MW have stalled new developments were apparent in the latest renewable energy planning database published by the UK’s energy department on Monday.

Solar capacity entering construction in the four months to the end of April 2017 amounted to just 92MW, while 227MW became operational.

In comparison, 2.1GW of capacity entered construction or became operational in the first four months of 2016 while the figure was 3.4GW between January and April 2015.

Most recently commissioned sites are under 5MW, financed through the feed-in-tariff regime, while the majority of sites above 5MW are located in Northern Ireland and therefore not impacting the UK wholesale market.

Northern Ireland was exempt from UK government legislation in 2014 which closed the existing renewables obligation (RO) mechanism early for new solar capacity across England, Wales and Scotland from April 2015 ( see EDEM 7 November 2014 ).

Some projects remained eligible to secure funding until the end of March 2016 but this was still a year earlier than the planned closure of the entire scheme at the end of March this year.

New solar developments above 5MW currently have no option for government subsidy with the second contracts for difference (CfD) auction – in the process of preparations – only open to less established renewable technologies, which excludes onshore wind and solar.

Despite the manifest slowdown in solar installations, sources still expect solar’s impact on the wholesale electricity market to be felt more acutely this summer. Full commissioning and optimisation of sites that raced to meet the April 2016 cut-off will feed into the market this summer, one trader at a renewable energy company has previously said.

Just over 12GW of solar capacity is installed and active in the UK, according to National Grid data. Installed capacity has increased by 1GW since the end of last August. This is in contrast to the preceding two and half years when installation raced from 3.3GW at the start of 2014 to 11GW by August 2016, as developers sought to beat the RO cut-off deadline.

Onshore wind is the next renewable technology in the UK set to suffer a slowdown in installations following the closure of the RO in March. henry.evans@icis.com

By Henry Evans