INSIGHT: Solar success hurts wind

British solar is booming, with an estimated 1.1GW installed in the first quarter.

This suggests the country will add more than 4.5GW in 2014, potentially making the UK the biggest EU market this year, overtaking Germany, which is expected to install 3GW.

With more than 440 large ground-mounted PV projects at various points in planning, and with at least 124 of them with ambitions of coming on stream before April 2015 (according to researcher NPD Solarbuzz), an installation rush looks inevitable.

However, the Department of Energy and Climate Change (Decc) is alert to this high build level and has suggested changes to the Renewables Obligation Certificates (ROC) mechanism for large-scale PV, having learned from the German and Spanish experience, where generous subsidy schemes led to a much higher build-out than forecast.

In other countries we have seen a rush of installations ahead of regulatory changes, with Spain putting on nearly 3GW in 2008 and Germany building more than 7.5GW annually in 2010, 2011 and 2012 ahead of tariff reductions. There is no reason to expect Britain to be any different.

The UK now proposes to end the ROC scheme for ground-mounted installations greater than 5MW in April 2015, two years earlier than previously stated, to counter this projected overbuild. The risk is that the genie is out of the bottle and will prove hard to put back without accusations that the government is killing jobs.

This is potentially important for the rest of the renewables industry. Although Decc formally forecasts just under 10GW of solar by 2020, informal comments from the department suggest 10-12GW.

Changing the ROC availability may lead to a slowdown in large-scale installations in 2015. However, a residual market of 1GW a year looks quite plausible for small rooftop installations. Decc has indicated it will continue to support these, which means the UK’s aspiration of 20GW of PV by 2020 does not look far-fetched.

Increased solar deployment will probably lead to lower installations of other technologies, as Decc will only support enough renewables to allow the UK to hit its primary energy target of 15% from renewables contained in its National Renewable Energy Action Plan (NREAP) set by the EU.

However, lower-than-expected electricity demand due to the EU-wide recession of 2009-13 has led to an undershoot of electricity consumption, and a consequent reduction in required generation capacity.

The faster-than-expected fall in the cost of solar has also led to an overdeployment of PV relative to national targets in many other countries. With nearly 80GW of solar installed by the end of 2013, Insight believes that the EU has already reached its 84GW goal for solar — way ahead of the 2020 target date. With the European market predicted to see a resumption of modest growth from its 10GW a year in 2013, total PV installations in 2020 could easily reach double the original target.

As a result, other technologies have fallen behind scheduled NREAP deployment levels. The UK has been no different in this respect: wind installations — both onshore and offshore — have come in below original targets. Collectively, the wind industry in Britain is likely to see nearly 7.6GW less capacity than envisaged in the original action plan.

Decc also notes that solar is the most popular renewables technology (82% approval, according to the Renewable Energy Association) and onshore wind is the least popular (12% disapproval), so it may prove politically expedient to support more solar than wind, especially as residential PV benefits voters more directly than commercial wind farms.

An extra 8-10GW of PV on top of the expected 10GW would mean a further 4-5GW of lost wind installations in the UK, Insight estimates, leaving little more growth in onshore and offshore wind.

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