UK solar could be cheaper than fossil fuels by 2020

8th June 2015


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  • Business & Industry ,
  • Renewable ,
  • Mitigation

Author

Irene Martin

Solar power could soon achieve grid parity and be free of subsidies given the right push from government, according to the Solar Trade Association (STA).

Publishing its solar independence plan today, the association said that simple adjustments to existing policies will potentially enable the UK to deliver almost twice as much capacity as current policies and spending commitments allow, resulting in solar power becoming subsidy free.

The plan presents two scenarios to deliver capacity higher than the government is currently planning, at a much lower cost per unit of energy. A lower ambition strategy could deliver 20GW by 2020 for a cost of £1.4 billion, the STA estimates. This is £200 million more than the energy and climate department (Decc) has outlined in its PV strategy, but the Decc figures will only deliver 12GW of capacity.

If solar capacity reached 20GW by 2020 it would generate 5.6% of the UK’s electricity, making both domestic and industrial rooftop arrays subsidy free, the STA says. The association also states that, under this scenario, solar farms would be competitive with gas-powered generation by 2018, and competitive with wholesale electricity prices by 2025.

In the STA’s higher ambition strategy, 25GW could be installed by 2020 if a further £150 million was spent . This would see solar power installed over the next five years on more than two million homes as well as 240,000 commercial rooftops and community sites, and create 2,000 solar farms. It would also generate 56,900 jobs.

A further 3GW would be added if the government provided incentivises for rooftop solar on new-build homes through the zero carbon homes programme, the association calculates.

The association says its higher ambition strategy would allow UK solar businesses to secure a share of the booming global solar market. The STA notes that analysts at the IEA and Deutsche Bank, among others, predict that solar will dominate the world’s future power supply, with UBS forecasting that the global solar market will be worth $5 trillion to 2035.

The association is urging the government to take six steps to help the solar industry become subsidy free:

  • adjust feed-in tariffs by changing the banding system and reducing the rate of subsidy faster for domestic installations to free up budget to incentivise the commercial market;
  • safeguard the renewable obligation for sub-5MW systems to 2017;
  • allow solar a fairer share of the levy control framework, the government’s cap on energy subsidies;
  • adapt contracts for difference to benefit solar and small and medium-sized enterprises;
  • incentivise the incorporation of solar into new build homes and offices; and
  • address grid constraints.

Paul Barwell, chief executive of the STA, said: “Our goal is to secure a strong British solar industry that can beat fossil fuels on price without subsidy, as quickly as possible. If the industry is given the right support this parliament, it can deliver clean, affordable power at a stable price to the public and to British business in perpetuity.”

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