The next Parliament could deliver subsidy-free solar, but only if they get the policy right

16th February 2015:

Solar power is getting cheaper and cheaper – and the panels are getting more and more efficient. This is already beginning to have a revolutionary impact on our energy system: clean, home-grown, decentralised electricity generation that will soon be so cheap it won’t even need a subsidy.

Ever cheaper solar is good news for our planet and good news for energy bill payers faced with rising coal and gas powered energy prices.

And this isn’t just a technology for sunnier climes. Despite our infamous weather, solar in the UK generates two-thirds as much power as in Madrid, and the panels work more efficiently in cooler British temperatures. It is about sunlight not sunshine – solar irradiation to use the exact term. And by a happy coincidence, our roofs are pitched at just the right angle to capture maximum solar power at this latitude.

Solar makes no noise, creates no waste and emits no carbon. On rooftops, it is a ‘fit and forget’ technology. In solar farms screened from view with hedgerows, you often don’t even know it’s there. And good solar farms do not displace agriculture. Sheep can graze the land in between the panels, and the farms can become a haven for local wildlife.

The one thing that limits solar is of course that it doesn’t generate power at night – but this makes it a particularly good match with wind, and cheap battery storage packs are already beginning to overcome this. And solar is actually remarkably predictable on a day ahead and hour ahead basis – you can bet the house on the sun rising and setting at the pre-agreed time!

Solar in the UK, currently Europe’s largest market in the technology, could soon reach the point that it no longer needs any form of subsidy – on residential rooftops, commercial roofs and in solar farms.

Recent analysis found that solar power that is competing with expensive retail and commercial electricity prices in homes, schools and offices could be competitive without subsidy within the next 10 years, and sooner in the case of commercial roofs – within the course of the next Parliament.

Solar farms, which compete with power stations and cheap wholesale electricity prices to feed into the grid, could be a cheaper way of generating electricity than gas as soon as 2018. Furthermore, based on current forecasts for wholesale prices, solar could come in cheaper than the market price for power at some point between 2025 and 2028.

But all of this is assuming a stable policy regime with gradually decreasing levels of support in line with falling prices.

When DECC published its national Solar PV Strategy in April of last year, it was an opportunity to set out its plan to reduce support gradually with a view to getting solar to the point that it can stand on its own two feet. But it didn’t.

Instead the Government then closed the current Renewables Obligation subsidy scheme completely for solar farms over 5 MW (about 25 acres). This is perverse – all this is doing is holding back the UK’s second cheapest renewable and making the low carbon energy mix more expensive than it needs to be.

So we have put together an alternative plan. By making a few simple changes to the structure of the Feed-in Tariff – creating new bands with a higher tariff for medium-sized rooftop solar to give it room to grow, and making sure there is a gradual decrease in the tariff for residential solar by adjusting the thresholds for drops in the tariff – we will see more solar on roofs and a clear path to subsidy-free solar.

With regards to solar farms, the Government needs to fix the new Contracts for Difference scheme so that small players, like those in the solar industry, can compete on a level playing field with the big guys. At the moment the scheme puts what is set to soon be the cheapest (and currently the most popular) form of low carbon power at a real disadvantage.

And no one wants to get to subsidy-free solar more than the solar industry itself. Britain’s several thousand small and medium sized businesses that make up the solar sector cannot wait to be free of the constant changes and instability of this Government’s policy on solar.

Globally, the solar market is going to be worth £78bn by 2020. Everyone from Deutsche Bank to the International Energy Agency is saying how solar is the one technology that is going to transform our energy supply. Utilities that fail to adapt to this new pluralistic, decentralised form of energy supply could find themselves under threat.

Subsidy-free solar is nearly reality. But what is even more certain is that the costs will only come down if Government policy supports steady deployment in the meantime. The more solar you install, the cheaper every install becomes. We just need one final push from Government in order to reach solar independence, and the 2015-2020 Parliament has the opportunity to deliver that push.

Paul Barwell, CEO