‘Solar power could be cheaper than UK gas in three years’

 

Dr. Nina Skorupska, Chief Executive, Renewable Energy Association
Dr. Nina Skorupska, Chief Executive, Renewable Energy Association

The Contracts for Difference (CfD) register released by the Low Carbon Contracts Company – the administrator of the CfD scheme – has confirmed that neither of the two solar projects that won CfD contracts for this financial year will go ahead.

A spokesman for the Solar Trade Association commented: This confirmation shows that what everyone in the industry was saying was right: the £50/MWh bids wouldn’t get built.

“The fact that no large solar farms will be built in the next year under either the RO or CfDs is a tragedy – as we predicted these types of projects could be cheaper than gas in just three years with stable policy support.”

With the RO now closed to >5MW solar farms, and no CfD projects going ahead for the next year, it is a struggle for many companies. There will be some large-scale projects built under grace periods for the RO.

This confirmation means that only 60% of the solar projects that won will go ahead (3 of 5). This contrasts with the onshore wind sector, where 100% of the projects that won were signed (15 of 15).

The spokesman added:For an industry that is predicted to be the dominant global energy source by 2050, the UK’s rollercoaster policies are not helping its position. We hope that the new government looks at this technology with fresh eyes to develop a fairer and more sensible approach.”

In contrast, two separate reports by Deutsche Bank and Edinburgh-based Wood Mackenzie forecast a bright future for solar power across the globe. Key points comprise:

Deutsche Bank:

  • Cost trajectory of solar on pace for a further ~40%+ reduction by the end of 2017
  • Coal based wholesale electricity, currently the lowest cost for generating electricity, is  currently half the cost of solar but solar will match it over the next 12-18 months
  • Cost of storage will decrease from ~14c/kWh today to ~2c/kWh within the next five years
  • Some forms of energy storage will halve their costs 2-3 years
  • For the UK retail grid parity for solar should be reached in the next few years

 

Wood Mackenzie:

  • Solar energy in 19 US states is expected to reach grid parity with coal by 2020 with twice as many states reaching grid parity by 2030
  • Falling module costs and improved efficiency to encourage development of more solar plants

 Dr Nina Skorupska, Chief Executive, Renewable Energy Association, said: “These reports recognise solar as a game-changer in terms of its potential to deliver cost effective decentralised energy solutions and security for states across the world.

“For the UK, solar with storage can provide a secure source of renewable energy that can be deployed in quantity faster than nuclear.

“In light of the findings of these reports, we call on the next British government to encourage the ongoing deployment of solar and development of storage which could be viable in the UK as early as 2017 by levelling the regulatory playing field for developers, in particular through ensuring sufficient support is forthcoming to ensure a viable industry is in place when grid parity is reached.”

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