Subsidy Free Solar Farms: Are we close?

The message was clear from the Government when it slashed feed in tariffs back in January 2016 – solar businesses needed to stand on their own two feet. This backtracking happened because take up had been much bigger than they expected, both for businesses and homeowners, and there were worries about the impact this would have on energy bills.

Once the Government left the industry to fend for itself, many feared it would cause job losses and present insurmountable challenges for the market. This did happen but perhaps not to the extent many feared.

The good news is that plans for new solar farms are still being submitted and the UK could well come out as one of the leading post-subsidy markets in Europe, if not the world. There is, to all intents and purposes, a rebound on the way, though it requires the right conditions if investors are to be attracted in large enough numbers. While growth may be small at the moment, we could be a lot closer to subsidy free solar farms than we think.

The History of Solar in the UK

  • Before 2002, if you wanted to install solar panels on your roof it would cost you around £40,000 and you wouldn’t be able to access any subsidies.
  • Around March that year, however, 50% grants became available and this continued until 2006 when the they were inexplicably cut. If you think that the Tories have a bad record on solar, the Labour party hasn’t always covered itself in glory over the last couple of decades either.
  • A new funding system for low carbon technology was introduced shortly after this but that ran into trouble pretty quickly.
  • April 2010 saw the Feed in Tariff introduced which provided those who installed solar on their homes or businesses with a strong subsidy to promote growth.
  • This continued until 2011 when the Government decided it wanted to cut the FiT. The installers took the Government to court and won.
  • That didn’t stop the DECC cutting the FiT again in 2012 and slashing it significantly in 2016.
  • Despite the often uncertain funding infrastructure, the solar industry has grown dramatically over the last ten years.
  • In 2008 we were producing just 22 MW capacity using solar. By 2016 this had risen to 11,562 MW.
  • This year, however, monthly deployment of solar reached an all-time low.

Solar’s Future Shines Brighter?

The loss of the feed in tariff may have been a blessing for the solar market, at least in the long term. It has forced the sector to look at new ways to fund projects, get investors on board and to change their existing business models. For many observers, it has potentially put the UK solar market in a good position to deliver subsidy free developments over the next decade or so and could even make it a market leader across the globe.

The closure of the Renewables Obligation scheme did cut off the route for large scale projects and certainly dampened the future for further developments. That naturally left the industry with few options, the most important being subsidy free solar.

If you think that means solar farms aren’t being built, however, then you are wrong.

Hive Energy announced that it will begin work on a 40MW installation in Hampshire and the project will have no subsidies at all. The company has kept how they are going to be financing the farm secret and planning permission has not yet been granted but, according to CEO Giles Redpath:

“This subsidy free solar farm will generate a level of renewable energy which will make a significant contribution towards meeting national renewable energy targets and will help to increase the security of the UK’s energy supply.”

The lowering cost of building solar farms is undoubtedly a bonus when it comes to attracting investors and could well be the major hurdle that we need to overcome to make projects such as this the norm rather than the exception. Advances in battery storage may also be a further clincher when it comes to getting more reticent investors on board.

It’s clear, however, that this is not going to be a smooth path and many still believe that the government has to a certain extent hung the industry out to dry without any good reasoning at a time when it was really beginning to find its feet. What the industry needs, according to the CEO of the Solar Trade Association, Paul Barwell, above all, is a level playing field:

“Let’s be excited about solar and its prospects for delivering the energy revolution we need on time. But I urge those who want to see solar thrive to stay focussed on advocating the sensible and fair policy changes we need to get there.”

During the spring bank holiday, solar produced a record quarter of the nation’s power mix and there’s currently enough capacity to serve some 3.8 million homes in the UK. According to some experts, there are plenty of new projects in the pipeline. The problem is that many companies are simply sitting on them waiting for the costs to work out in their favour.

Some also believe, however, that moving to an unsubsidised market place will settle the industry down once and for all and give an opportunity for sustainable growth. Add in the prospect of developing power storage in the years to come and you can still realistically expect the solar sector to shine bright in the future.

It may be quiet at the moment, but there are big plans afoot.