Solar cuts unfair

11 September 2012

Two new consultations resulting from the Renewable Obligation (RO) Banding Decision are seeking to amend support for solar power under the RO, and open up the possibility of removing sub 5MW solar from RO support altogether.

The consultation proposes cutting support for solar under the RO by 25% from 2 ROCs to 1.5 ROCs. Very little solar had been built under the RO until this year because it had not been financially viable. However, the solar industry was challenged by DECC to reduce costs to a level where it could expand under 2 ROCs, which makes solar competitive with other key renewables. The non-domestic solar industry is now starting to expand at 2 ROCs after it was derailed by cuts to the Feed-in Tariff (FIT) over a year ago. Around 500MW is projected to go in this year under the RO, the majority of which will be sub 5MW.

Solar Trade Association (STA) CEO Paul Barwell said: "We have delivered really exceptional cost reductions in the solar industry, yet we once again face having the rug pulled from under us. The proposed 25% cut is too big and too soon. We understand DECC have concerns about how solar will interact with other renewable technologies under the RO, and how it will influence the budget, but deliberately under-rewarding solar to curtail the industry is definitely not the solution. This is not a fair proposal and it is not in the public interest to constrain a cost-effective technology."

The STA is still awaiting the other DECC consultation on proposals to remove sub 5MW solar from RO support altogether. It is vital that both consultations are considered together to ensure a coherent and ambitious framework for solar. DECC's proposals to cut RO support by 25% appear to be based on aligning the RO to the 7.1p level of support available for the upper bands under the FIT. However, the FIT support levels in these upper bands were not set at a level to encourage investment, as larger investors had the RO option.

Paul Barwell said: "The STA does not consider alignment with the deliberately ineffective 7.1p FIT a credible basis for setting support for RO solar. It is vital that industry provides the supporting information to DECC, and that DECC really listens to the evidence on this consultation - it must match their rhetorical ambition of 22GW.”

The STA is setting up a Large Scale PV Group that will include installers, developers and investors in order to provide detailed feedback to Government on the consultation. The STA is particularly concerned about mid-sized schemes for which the solar market has barely begun. This important market risks falling through the policy framework unless great care is taken.

The STA was also dismayed to see the very low deployment projections using out of date information presented in the consultation. Paul Barwell concluded: "We're perplexed as to why these old projections have been repeated in this consultation. Projections of a few megawatts, rather than gigawatts of solar obviously are not consistent with the hard-won ambitions for solar that DECC Ministers have clearly articulated."