Government creates uncertainty over Solar Energy Projects
Solar projects less than 5MW could now face significant uncertainty either being slowed down or deferred following the Government’s recent announcement on changes to subsidies. So what does this mean for the future of solar installations in the UK?
The main change announced relates to the ROC qualification (generally 1 MGW schemes and above). In order to qualify for a Renewable Obligation Certificate (ROC) under RO 1.3 a project must now be in planning, have a land deal in place and have secured a grid offer. If any one of these criteria is not met then the project will be subject to an uncertain ROC value. This creates a much tougher market place and as a result investors will now have to focus on delivering pipeline from existing projects, rather than looking at new projects.
For smaller scale projects reliant on the Feed in Tariff (FiT) the government have proposed looking at the level of the subsidy and also the possible removal of the pre-accreditation facility.
Subsidy levels for sub 250kW schemes have already been substantially cut over the past two years and it is unlikely these schemes will remain viable should further cuts be announced.
Pre-accreditation allows the applicant to tie in to the current level of subsidy for a period of 6 months; however it can only be applied for with a valid planning consent and an accepted grid connection offer. This was a very sensible facility the government introduced some two years ago and therefore very surprising to hear they now propose to axe it.
It is important to note that these are proposals at this stage and not implemented changes, although there does appear to be a clear message that government intend to make life extremely difficult for those thinking about investing in renewable energy projects.