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STA responds to DECC renewables announcements

19 December 2012

STA responds to RO decision for solar power and calls for further action to improve economics

DECC has decided to reduce support for solar power under the Renewables Obligation from the current level of 2 ROCs (Renewable Obligation Certificates) to 1.6 ROCs from April 2013 – a reduction of 20%. This is higher than the level of 1.5 ROCs which was initially proposed. The STA recommended an initial cut of 10% (to 1.8 ROCs) to ensure continued expansion of deployment. However, the degression rate has improved from previous proposals.

STA CEO Paul Barwell said: “There are pros and cons here. We are somewhat disappointed with the decision on the level of ground-mounted support for 2013. We brought DECC and the industry together to provide the data needed to make an evidence-based decision. But DECC has at least agreed an improvement on previous proposals and the degression rates are much more sensible.

“However, it means that solar deployment could be overly constrained when, even with a fraction more support, it would still be cheaper than many other low-carbon technologies. It is difficult to understand why the Government is aiming for 'slow growth' in this cost-effective technology when we have a challenging renewable energy target to meet.

“Given how the RO has been set on the low side for solar, we will be pressing DECC and Ofgem to act quickly to remove unfair barriers to solar power that impose unnecessary costs, such as timely grid connections. We are also keen to see action to support the stability of the ROC regime.”

The STA is pleased to have successfully won the argument with DECC that 25 years lifetime is appropriate for their cost-calculations. We also welcome the decision to drop the proposed equivalence with FIT levels. This would not have been a fair mechanism for setting RO support.

Recognition for mid-size roof mounted sector
Although the RO consultation was originally focused on utility-scale solar, the STA has successfully won recognition of the mid-size roof-mounted solar sector, which has yet to take off in the UK, but which has huge potential. This sub-sector has been offered a new band of 1.7 ROCs.

Paul Barwell said: “We are pleased to see that our hard work on mid-scale roof-mounted solar has paid off as it has finally gained recognition from Government. We are very pleased that Minister Greg Barker has recognised the huge potential for this sub-sector.

“The STA has long argued this sub-sector needs greater support, and we will be looking at the economics of the 1.7 ROC level. The STA also recommends that this sector should be supported within the Feed-in Tariff, which is much more user-friendly for investors outside the power industry.”

However, one piece of reported good news (not in the consultation response) for the roof-mounted sector is that the Carbon Reduction Commitment, which applies to the 10,000 largest users of power in the commercial and public sector, is to be made solar-friendly. Currently the CRC treats on-site solar as equivalent in its carbon output to average grid mix electricity if companies claim RO or FIT support. The STA and REA have long argued this is perverse and are delighted to see DECC adopt a positive approach. The STA will be looking closely at how the CRC, current retail electricity prices and the roof-mounted RO band will work together.

Grid Integration Issues

The STA was surprised to read that National Grid are cited in the Government's response saying deploying more than 10GW of solar PV would make balancing the grid 'significantly more challenging' in its current form, with a technical potential for 20GW. In the view of the STA this is incorrect and the grid will take significantly more capacity than this. Solar and wind provide a complementary generation profile that has appears not to have been considered.

STA PV Specialist Ray Noble said:“German grid engineers are overcoming the challenges of integrating considerably more solar than National Grid anticipate. We have every confidence in the competence of British engineers to accommodate new technologies.”

Moving forward in the New Year
The STA has established a Large Scale PV group which will address the larger roof and ground mounted sub-sectors. It will work to remove barriers to deployment, produce best practice guides on technical and planning issues along with providing the tools for a ‘route to market’ for power generators under EMR. Importantly it will work with stakeholders including the general public to get the right messages about solar to where it is needed most.

Ray Noble said:“At last the Government have now recognised all sectors of the solar industry and provided clear support mechanisms through to 2015 for FIT and 2017 for the RO. Together with the inclusion of a 20GW target for Solar, this provides better confidence for the solar industry to develop its own sustainable future.

“Industry now has the exciting opportunity to work with Government to develop a UK Solar strategy, focused on overcoming barriers to deployment across all sub-sectors: from houses and office buildings to industrial and ground-mounted applications. With electricity prices continuing to rise, we are confident that solar will reach grid parity within this decade. Solar will play a major role in the UK energy mix, and enable customers to take real control of their energy supply and costs.”

The STA is continuing to push for improvements to the Feed-in Tariff, and has teamed up with Solar Media to launch a roadshow in the New Year to help kick-start the PV FIT market. The roadshow will be launched by Energy Minister Greg Barker and the DECC team will also be speaking positively about solar on the roadshow. The STA will also be launching a public-facing campaign on solar in the New Year.

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