Political shifts and technical advances redefining the UK solar energy market

Cadland Estate Solar Farm completed

As featured in Issue 21, 2012 (Europe Edition) of the PES (Power and Energy Solutions) Magazine (Solar), pp 86-88. Information correct at the time of print. 

JPCS, the innovative UK-based ground mounted solar PV construction expert, discusses the physical, technical and political challenges facing the ground mounted solar PV market.

Contrary to widely-held misconceptions, opportunities in solar energy in the UK are increasing.  According to finance experts, there are more investors interested in funding large-scale ground mounted solar PV projects than ever before.

In the industry’s early years, development of the UK market was skewed more by government policy than market forces. The way forward for solar energy and other renewable technologies was seen as the proliferation of thousands-upon-thousands of small scale roof or garden installations, funded by ‘retail’ sources of finance.

Those who installed electricity-generating technology from a renewable or low-carbon source, such as solar photovoltaic or wind turbine, qualified for the government’s Feed-In Tariff scheme (FiT).  Residential households, businesses, farms and small landowners could benefit from low cost energy generation and also have money rebated from their energy supplier for the surpluses they exported to the grid.

However, proposed changes to this government tariff triggered a period of considerable uncertainty.  The reduced FiTs for solar PV systems came into effect on 3rd March this year, not 12th December 2011 as the UK Government had originally intended.

The UK Government has since announced that a further cost control framework for solar PV, reducing FiTs, will be in effect from 1st August 2012 and rates for other renewable energy technologies should be reduced, or stay the same, from 1st October 2012.  Specifically:

  • The new tariff rate for solar PV <4kWp will drop to 16p/kWh with an EPC band D or higher (if band E or less the lower tariff rate has also dropped to 7.1p/kWh).
  • The export tariff rate will increase to 4.5p/kWh for all new solar PV installations.
  • The tariff period (lifetime) will be reduced for solar PV from 25 to 20 years for all new solar PV installations.

These new tariffs are quite complex but the broad conclusion is that for those small operators, like homeowners and SME businesses, perhaps planning to erect a solar panel system on roofs and small plots, the limit of viability has been reached in all but the most sunny parts of the UK.  As global fuel prices fluctuate and energy costs follow, many of these small schemes slip in or out of viability.

Biggest challenges in the market

The Government has worked hard to encourage green energy initiatives but sadly the Road Map it’s set out for achieving 30 per cent green energy by 2020 is already out of date. A heavy focus on offshore wind has meant other energy sources are not given due consideration. The fast pace of change in the sector means the reports and research the Government is conducting are out-dated before they are even completed. Up-to-date research is needed.

Unfortunately, public opinion is still a major stumbling block for green energy. We all want green energy in principle but we don’t want to have our roofs covered with solar panels, wind turbines outside our windows or the smell of biomass in transit. More education is needed to encourage the public to embrace green energy solutions.

New opportunities

However, research evidence suggests that there is significant demand for long-term investment in large-scale, mainstream ground mounted solar PV solar power schemes, where the return is based on producing sustainable, renewable energy specifically for sale to the grid.  Installers focusing on FiTs alone may be missing out on other project opportunities.

No upper capacity limit

One alternative is Renewable Obligation Certificate (ROC) financing.  Projects over 5MW are ineligible for FiT payments but will receive incentive payments under the Renewable Obligation Certificate.

ROCs are green certificates issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. The ROCs place the onus on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources, so they are funded by the energy suppliers themselves and not the Government.

Therefore, while the Government’s feed-in tariffs have been cut significantly, there is no capacity limit for systems funded under ROCs.  Although there is limited awareness of this funding in the existing solar industry, many of the bigger players have pipelines of PV projects in place through ROCs. These tend to be those who see the ROC platform as the ideal ‘middle ground’ for investors, somewhere beneath the multi-million budgets of the wind turbine sector and above the uncertainties of small scale solar FiT model.

According to The British Photovoltaic Association (BPVA), the UK solar industry has reached an important and exciting stage in its development and has the opportunity, for the first time, to be the cornerstone of the government’s onshore renewable policy.

ROCs – the biggest opportunities in the sector

Where suppliers don’t have a sufficient number of ROCs to meet their obligation, they are required to pay an equivalent amount into a ‘buy-out’ fund. The administration cost of the scheme is recovered from the fund and the rest is distributed back to suppliers in proportion to the number of ROCs they produced in respect of their individual obligation.

ROCs produce their best savings on major energy plants producing 5MWp or more. As the cost of producing solar power has reduced significantly over the past few years, suppliers are no longer just looking at solar plants of just 30 acres – they are looking at sites of 300 acres or more.

Lower costs

This opportunity is also due to two other factors: significant cost reductions in the price of both solar modules and, importantly, improved installation techniques.  In light of these developments the solar industry in the UK is now a cost-effective solution which compares favourably with other renewable technologies.  Solar has the potential, using lower subsidies, to see to a significant increase in installed capacity over the coming years and to be a major part of the government’s 2020 renewable electricity target.

The 22GW target set and confirmed by the Government has the potential to transform the UK market in one of the most interesting energy markets in Europe over the next few years.

Cheaper installations

In the past, traditional, relatively expensive, time-consuming and environmentally damaging methods have often been used to install the frameworks to which solar panels are attached.  This involved excavation, concrete foundation groundworks and back-filling: methods used for planting fence posts for generations.

Innovation in foundation systems has meant this is no longer the case, take the  German-engineered Groundscrew® system for example. Groundscrew® is a robust and sustainable alternative to traditional concrete foundations for ground mounted solar pv panels. The system removes the need for excavation and concreting. Where you would usually cast small concrete pads, Groundscrew® can be used instead.

In essence, a series of rigid, threaded, PVC columns are accurately screw-driven into the surface and subsoil to provide a robust, durable, non-invasive and secure footing for the panel-supporting structure.

Groundscrew® foundations are light in weight and easy to transport to the site. They have proved highly effective: sufficiently flexible to survive high wind loads and work in extremes of temperature or adverse chemical, biological and geological conditions, with the advantages of rapid installation and minimal maintenance.

The Groundscrew® system is now widely used across the world market, playing a leading role in making the ground mounted solar industry commercially viable and attractive to investors. JPCS pioneered the installation for ground-mounted solar panels using Groundscrew® and is now the UK’s largest specialist ground mounted solar PV installer.

JPCS has completed numerous green projects throughout the UK. These include the installation of comparatively small photovoltaic solar array projects, right through to some of the UK’s largest commercial solar PV ‘farms’. In 2011alone, the firm completed more than 20MWp of solar PV installations using this innovative Groundscrew® foundation.

The big green future

Despite the challenges which lie ahead, the future for ground mounted solar mounted PV is bright. Great return on investments is there for those who have the green vision to develop large scale solar PV projects.

JPCS is a nationwide specialist renewable energy services contractor. Delivering services nationwide, it has a large portfolio of low-carbon energy projects contributing to a sustainable future. JPCS is also a leading provider of highways and rail services in the UK.

Read Issue 21 of PES magazine. This article is featured on pp 86-88.