Lord Bourne, the Energy Minister in the House of Lords, told the Commons select committee on energy that solar no longer requires economic support or subsidies. He said:
“We are withdrawing subsidy where it is not necessary and the evidence is that costs for a lot of these, certainly solar, are coming down very steeply. So if these things are happening without subsidy and Lightsource, which is the largest solar company in the country on its website say they are installing solar without subsidy in 2016 so if we can do these things without subsidy, why on earth would we pay subsidy?”
But a Solar Trade Association spokesman said: “Lightsource have explained that subsidy-free installations can only be viable in niche applications where a ground-mounted solar power plant can be practically linked via private wire to a commercial building to replace high cost retail electricity, where low-cost finance is available and where the company is able to commit to a long-term power purchase agreement.
“It is deeply worrying that Ministers have the false impression that solar power no longer requires support to deploy in the UK. It is also surprising, given the most recent cost analysis conducted by ARUP for DECC last year to inform the RO Banding Review proposed support levels of 0.8ROCs for solar power, based on current cost evidence.
“While solar is now the cheapest major renewable, alongside onshore wind, it still requires modest support in the UK to deploy in any meaningful volume. This is also the case for new gas power stations.
“However, the Renewables Obligation has now been withdrawn entirely and ahead of schedule and ministers have confirmed there are no plans to implement a conventional CfD auction for the established technologies.
“There is now effectively no economically viable support in the UK for solar over 1MW in size, which is particularly cost-effective.”
Nick Boyle, Chief Executive, Lightsource Renewable Energy, has also written to British Energy Minister Amber Rudd over this matter.
He said: “The economics of solar PV are currently such that Lightsource will not be able to grow the UK’s solar generation capacity without subsidy on non-private wire projects.
“We have repeatedly stated in our submissions to the consultations on the changes to the RO and FIT regimes in 2015 that we believe that a certain level of support will be necessary for solar PV and other renewable technologies to be viable – although we are very confident that grid parity can be reached if adequate, stable and predictable levels of support remain in place.
“We have outlined our suggestions to focus subsidies on the deployment of residential, commercial and industrial rooftop projects to ensure swift transition to a subsidy free solar market by 2020.
“Indeed, we have made the case for higher FIT tariffs for the shorter term to enable the UK solar industry to complete the solar revolution sooner.
“We feel that an adjustment of the level of support to reflect current cost levels while providing a stable basis for the solar industry’s future development will lead to the fastest reduction of the cost of solar PV and shall therefore prove to be the most economical way forward.”