2019’s bright new dawn for low-cost UK solar power

2019’s bright new dawn for low-cost UK solar power

22 August 2019 By 0

Solar power is now proving that it can expand successfully with no state subsidies. After several years of boom, bust and government support – and with plenty of low-cost panels – the sector is en route to becoming 2019’s fastest-growing and potentially cheapest renewable in a highly-competitive UK energy market.

I think this is a huge opportunity, particularly if we link solar energy proposals to battery schemes designed to store excess energy on sunny days to balance the grid on cloudy days.

To maximise it, we must prepare to manage a surge in solar projects of all sizes moving forward into planning, installation, and delivery at a time when the case for new nuclear power stations in the UK’s low-carbon energy mix is becoming increasingly shaky.

In terms of low-cost panels, two recent events make this a particularly good time to build ground-mounted solar parks that should be profitable for 30, and even 40, years.

In terms of low-cost panels, two recent events make this a particularly good time to build ground-mounted solar parks that should be profitable for 30, and even 40, years.

smart energy

And there is more good news for small solar array operators. The Government’s Feed-in Tariff (FiT) for solar – which pays for spare power sold to the national grid – ends in April 2019 but will be replaced by the new “smart energy guarantee (SEG)” to encourage low-carbon energy use.

Acting quickly

Because the cheap Chinese panel phenomena is likely to be temporary, it’s probably wise to, I hate to say it, make electricity while the sun shines!

power station

However, putting all these long- and short-term factors together is extremely good news for solar energy, battery storage and the UK’s determination to decarbonise its economy.

Later, I would like to consider the rapid fall in solar energy development and operating costs, battery storage options, subsidy-free UK projects, and the size and shape of the UK project pipeline. But first I would like to look at why being subsidy-free is attractive.

Question and answers

To maximise new opportunities, we need to look at the environmental and planning aspects of a natural clean energy source that has a relatively small and benign footprint when compared to the infrastructure-heavy nuclear and fossil-fuel industries.

It is also important to understand solar energy’s rapid move up from the back of the energy pack to challenge low-cost offshore wind, and probably even cheaper onshore wind.

However, this begs the question of why being subsidy-free is central to solar’s continuing success? Surely, financial support that makes energy cheaper in the marketplace is always good?

Apron-strings

Well, the answer here is up to a point. Subsidies help to create frameworks where “learning-by-doing” gives much-needed fledgeling industries the chance to develop “economies-of-scale”.

The downside is that they can also create dependency and distort markets – particularly when “start-stop” policies, such as creating and then withdrawing the Renewable Obligation (RO) scheme, disturb investor confidence, as happened with solar. But conversely, the government can’t risk not meeting its binding carbon-reduction targets. Cool heads are needed all round.

This adds to the case for solar energy to stand on its own financial feet.

Cost cutting

The National Grid estimates the UK could be on track for a solar capacity of 18GW by 2030; installed capacity at end-2017 was 12.8 GW. In comparison, by mid-December 2018, UK installed wind energy capacity was calculated as 12,628MW onshore and 7,899MW offshore, making us the world’s fourth largest wind power generator. China is the world’s largest solar power installer with 52GW in 2017.

Hopefully, wind’s continuing cost-cutting success bodes well for solar; the Financial Times reported in September 2017 that since 2012 offshore wind energy costs had fallen by nearly a third to an average of £97/MWh– four years ahead of schedule.

wind farm

Offshore wind then gained a state-guaranteed “strike price” for its output under for the Contract for Difference (CfD) scheme in Government energy auctions, overtaking nuclear. Solar energy is on a similar cost-reduction path but not currently eligible for CfD. Many people want this to change.

Meanwhile, two respected bodies have examined the falling cost profile of solar energy.

Research findings

The Solar Trade Association’s (STA) updated assessment (https://www.solar-trade.org.uk/wp-content/uploads/2018/12/Cost-reduction-potential-for-large-scale-Final-Version.pdf) of the solar levelized cost of electricity (LCOE) – defined as the cost of electricity over a project’s lifetime – concludes that solar is on track to become the UK’s cheapest form of energy – and green too.

STA estimates that solar LCOE during 2019 will be £50/MWh – £60/MWh, far lower than the £80/MWh forecast in 2014 and competitive against natural gas and onshore wind. STA says this could fall to £40/MWh by 2030, and through technology, auctions, networks access and a climate change levy exemption, wants to see a level playing field with other energy sources.

The Massachusetts Institute of Technology (MIT) is also reported to have built a research model to analyse solar panel costs over four decades, splitting them into “low-level” and “high-level”. Low-level covers materials cost, wafer area, module efficiency and manufacturing factory size; high-level looks at technical developments, learning-by-doing and economies of scale.

Many different variables often change at once; analysis isn’t easy. However, rising solar cell efficiency has had the greatest effect on cost-per-watt, followed by falling prices for silicon and non-silicon materials. Larger manufacturing plants with less labour and better-quality control have contributed to an almost 40% fall in panel costs, according to the report.

Enzygo and energy development planning

I believe that combining these many factors, including the UK’s requirement for grid balancing services via battery storage capacity, amounts to a major green energy investment opportunity.

Enzygo’s multi-disciplinary environmental planning approach (https://www.enzygo.com/our-services/) has taken a wide range of successful projects to completion in wind, solar and hydropower, plus gas extraction, gas-to-wire, and coalbed methane, for clients that include IGas Energy, International Power, Sterling & Wilson, Camborne Capital, Infinis, Tesla.

Over the past 24 months Enzygo’s planning team has consented 715 MW of Battery and STOR power, across a range of UK sites from industrial, greenbelt to brownfield sites. For more information on one of our battery storage and EV charging point schemes follow the link (https://www.enzygo.com/projects/services-battery-energy-storage-ev-supercharging/). We bring together all aspects of planning policies and procedures, from initial site appraisal and selection through to planning applications and appeals and stakeholder management. This regularly involves ecological planning, visual amenity, and landscape design, flooding risk mitigation measures, transport, access, community engagement, plus waste, pollution and emission controls.

enzygo 61 standby energy facility applications

Pipeline

How many more? Solar Media’s research team has added real and removed speculative schemes to work out that the number of genuine ‘live’ genuine projects in the UK pipeline is about 130, from 250kW to 350MW with a total capacity of 2.53GW (https://marketresearch.solarmedia.co.uk/products/uk-large-scale-solar-farms-the-post-subsidy-prospect-list).

Making reasonable assumptions, circa half have full planning applications submitted; the other 50% are not yet in planning. Threequarters come from the subsidy period. The team expects the ‘live’ post-subsidy list to keep on growing. During 2018, it estimates that between 110MW and 120MW was installed and that this could expand post-subsidy to between 300MW and 600MW in 2019.

What is a subsidy?

A further note on the difficulties associated with subsidies might be helpful. It is hard to be truly subsidy or tax-break free; governments carry risks at some level on almost all projects. This might be a shared grid connection or overlapping development costs. Principle support programmes have included the Non-Fossil Fuel Obligation in the UK, followed by the Renewables Obligation (RO) which became a key support mechanism for large-scale renewable electricity projects in 2002 before closing to all new generating capacity in March 2017.

Problems arise when governments create uncertainty, not stability. When renewable capacity rose from 9.3MW at end-2010 (the year FiT began) to 38.8MW by the close of 2017 (of which 12.9MW was solar), the Government did what governments do and pulled the rug out to cool things down.

Although more workable suggestions have been put forward recently, it is clearly an advantage for the sector to compete on its own firm financial feet. The size and location of new subsidy-free projects are also important.

Solar nuclear v manmade nuclear
Solar nuclear v manmade nuclear

In November 2018, NuGen announced the closure of its Cumbrian Moorside nuclear power station project. Hitachi halted work at its Wylfa Newydd project on Anglesey in January 2019. Hinkley Point C is now the only new station actively under construction.

That leaves plenty of potential for the highly-competitive, ultra-clean and cost-efficient natural radiation we take from the sun!

Please feel free to contact me for further information. All discussions are confidential.