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U.K. to End Aid Plan for Solar Parks in Subsidy Overhaul

May 13 (Bloomberg) -- The U.K. proposed ending one form of aid for new large-scale solar plants and said projects will have to compete with onshore wind and other renewables for another.

Solar parks bigger than 5 megawatts won’t receive so-called renewable obligation certificates from next April, according to proposals unveiled today by the Department of Energy and Climate Change. Under the newer system of Contracts for Difference, the technology will have to compete with other technologies from October, DECC said in a separate statement.

Ministers are seeking to cool the U.K. market for large-scale solar plants, which has become Europe’s largest following a boom in installations in the first quarter. Solar capacity has risen to more than 4 gigawatts from 3.3 gigawatts at the end of last year led by ground-mounted projects, according to figures from the Solar Trade Association lobby.

“The industry will be alarmed by these proposals and surprised to be singled out for harsh treatment,” Paul Barwell, head of the Solar Trade Association, said in an e-mailed statement. “It does look like the government is seeking to define the energy mix and hiding behind the false excuse of budget management.”

The proposals today are about ensuring the right balance of support for renewables and a smooth transition to the new contracts for difference, according to the government. Large-scale solar is deploying much faster than it expected and there would be more plants than is affordable by 2017, it said.

That’s why it aims to close the renewables obligation program for larger solar plants before the previously planned cutoff of 2017. The program grants tradable green certificates for 20 years. Smaller projects will still be eligible for ROCs, with those on rooftops or community-owned benefiting from increased support.

Grace Period

The government will not change the current renewable-obligation support levels, and investments made by today will get a one-year grace period from April 2015. Still, the news comes as a “crippling blow” to the future of an industry that won’t be able to compete with onshore wind until 2017/2018, STA said in a statement.

Onshore wind and solar will have to compete with energy from waste with combined heat and power, hydro plants, landfill gas and sewage gas when they bid for contracts for difference that will be awarded in October. That program will guarantee power prices received by projects for 15 years.

Competition

The government will divide technologies into established and “less established” groups, with the first set competing for subsidies this year. It also proposed a third category for coal plants that convert to biomass. It said it’s considering classing them as “established” technologies within a third group that wouldn’t compete with wind and solar, and may instead have its own budget.

The less-established technologies will include wave and tidal power, offshore wind, anaerobic digestion, dedicated biomass plants equipped with combined heat and power, and geothermal plants. They won’t compete with each other or with the other technologies, but rather all projects seeking support will be funded if they fall within the allocated budget.

Ministers also proposed setting a 100-megawatt minimum threshold for wave and tidal stream power, in order to ensure they are developed.

The U.K. currently has about 10 megawatts of trial wave and tidal plants, more than the rest of the world combined, according to the government. It estimates deployment may reach as much as 150 megawatts by 2020, with “gigawatt-levels” in the late 2020s.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Marc Roca in London at mroca6@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Alex Devine, Tony Barrett

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