News Article
Renewable Obligations Review
Solar industry will be looking for guidance in report
The Renewable Obligation (RO) Banding review is to be published in August, just as the new rates for solar come into effect under the Feed-In Tariff, making solar over 50kW unviable in the UK. The STA hopes that the RO can be used instead to fill the gap and secure major UK solar manufacturing opportunities.
Solar is currently given 2 ROCs of support, which is insufficient to support the industry. The RO Banding Review will set out the support levels that the Coalition Government plan to offer to different renewable power technologies under the 2013 Renewables Obligation (RO) Order.
This represents the last chance for the Coalition Government to support solar this Parliament. Despite the popular belief that solar is the most expensive technology, non-domestic solar power requires less support than some emerging technologies such as wave, tidal and deep geothermal. Solar does not require the grid infrastructure of offshore wind and in fact it has the potential to offer grid savings.
Solar has also been a key contributor in the phenomenon of electricity market price reductions in Germany and on the European Electricity Exchange as solar is shaving off day-time demand peaks, and therefore periods of highest profit for fossil generators.
If non-domestic solar is not offered support under the RO the UK stands to lose major manufacturing opportunities such as Kingspan's Generate and Insulate roofing system for the public, community and commercial sectors. Failure to support solar will also leave the UK turning its back on the most cost-effective parts of the solar industry and falling even further behind in Europe. Germany and Italy anticipate getting 10%+ of power from solar by 2020 yet the UK does not even feature solar power in the top 8 technologies identified in DECC's UK Roadmap.
The Solar industry has been frustrated by the inaccuracy of recent contradictory reports on the future cost and growth of solar power. STA believe the Climate Change Committee has overestimated the installed cost of solar in 2020 by 50% and ARUP's cost assessment to inform the RO Banding Review models solar in decline from 2020. Both reports fail to understand onsite solar competes with retail, not wholesale electricity prices, meaning solar is more competitive than is generally realised.
The historic support of 2 ROCs for solar PV was too low to foster a UK market. However, with the FIT schemes now only viable below 50kW, sufficient support under the RO is crucial if solar ambitions are to increase under the Coalition Government. The RO is not ideal for solar as, unlike the Feed-In Tariffs, this complex mechanism is designed for energy industry professionals. Nevertheless, it now appears to be the only hope the schools, hospitals, communities and SME's to benefit from solar and keep this sector of the industry going over the next few years. Recent studies suggest, given exceptional solar module price reductions, commercial/utility scale projects require a short period of extra RO support between 3-4 ROCs to secure major UK manufacturing opportunities and ensure the technology can thrive on 2 ROCs/MWh by the end of this Parliament.
Solar faces the additional difficulty that the EMR Contract-for-Difference proposals, which will start in 2014 and replace the RO in 2017, are not designed for on-site generators.