by Brianna Crandall — August 12, 2015—A report on the future of solar was launched recently by the U.K.’s largest renewable trade body, the Renewable Energy Association (REA), and global advisory firm KPMG. The report is considered especially timely following the announcement of the consultation on the closure of the Renewables Obligation (RO) for solar as well as a forthcoming consultation on Feed-in Tariff. It is expected to play a significant role in helping shape both of these policies.
The report details solar’s impressive cost reduction in the past decade and models different scenarios to grid parity in the next five years, enabling the industry to continue to develop as direct subsidies are gradually phased out. It also highlights the importance of maintaining support so that the majority of the industry, which includes many small and medium enterprises, will be able to reach grid-parity.
According to the report, ground-mounted solar is set to reach “grid parity” by 2020, and rooftop solar is following closely behind, but needs a stable policy to achieve the cost reductions necessary. The report provides a roadmap to achieve a post-subsidy industry, and asserts that the U.K. needs to avoid a cliff edge to ensure a smooth transition and help the nation achieve the most cost-efficient renewables strategy.
With U.K. government budgets under huge pressure, it is imperative that bill payers’ money and government support is used effectively in the short term, says REA, while ensuring a low-cost, low carbon future is achievable. Solar is expected to be a key technology in achieving this, and will be able to compete with traditional fossil fuel generation by the end of the decade if the government provides clear and stable policy leadership, adds REA.
The report assesses how solar could make the transition, utilizing alternative non-subsidy measures to keep the market from stalling, which would negatively impact companies and employment in the industry.
Key report recommendations:
- A national energy strategy is needed, incorporating energy storage alongside solar and giving a coherent overview of the grid.
- There is an opportunity to review the FiT and ensure tariffs are set at a level that allows acceptable returns and degressions are clearly set out.
- There needs to be a review of alternative ways to support the solar industry including, for example, the tax regime and net-metering to allow a smooth transition away from subsidies.
Director of the BRE National Solar Centre Jonny Williams commented, “This report clearly demonstrates the value that PV is currently bringing to the UK and can continue to deliver in the future under strong government leadership. Its recommendations for achieving a stable future without subsidies for the industry are practical and achievable.”
UK Solar Beyond Subsidy: The Transition is available from the REA Web site.
