Changes in the subsidy system for solar projects

Last week the government announced a consultation on changes to the subsidy system for large scale solar projects of over 5MW capacity which would equate to a site of about 30 acres. Originally it was planned that the current subsidy system which is involves so called Renewable Obligation Certificates (ROCs) was going to be phased out by 2017 but the latest proposal is to phase out ROCs for the large scale developments by 31st March 2015.

I suspect the primary reason for this is that there has been a huge expansion in solar development and as the general public have started to see these projects popping up in the countryside, support for such projects has started to dwindle.

It has been significantly easier to obtain planning consent for Solar parks than for wind turbines for example and as a result the scale of solar developments across southern Britain in particular has probably taken everyone by surprise, hence the government’s latest consultation.

After 31st March 2015, large solar projects will have to bid competitively for funding against all other forms of renewable energy production through a scheme called “Contracts for Difference” (CfD). As solar production is generally regarded as one of the less efficient forms of renewable energy production, it remains to be seen how well solar energy will compete for funding through this new scheme.

However, what this demonstrates is that the renewable energy sector, which is heavily reliant on subsidy, is a risky sector to be involved in because the government has a track record of chopping and changing its policy. These changes may be as a result of public pressure or the realisation the level of subsidy being offered is inappropriate, but for whatever reason this makes planning a renewable energy project very difficult.

It seems likely that if the ROCs are removed in March next year that we will see a headlong rush to develop out all the sites which are capable of being developed over the next year and so don’t be surprised to see a significant increase in the number of solar parks being developed in the coming months.

I am sure there will be many readers who will be pleased to hear that it is likely the development of large scale solar parks may now be curtailed but equally one cannot help wondering where our electricity will be coming from in 5 years time as many coal fired power stations are being decomissioned. Fracking is likely to be the next big source of energy and so perhaps all the antis need to be careful what they wish for. Maybe a few more wind turbines would not be a bad idea after all.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

EU changes it's renewable energy targets

Last week the EU announced that it was going to change its renewable energy targets although at the time of writing the significance of this is as yet unclear.

 

At present the target is to cut emissions measured against those produced in 1990 by 20 % by 2020 and for 20% of energy consumption to come from renewable sources by that date. This policy has certainly had a major impact on the British countryside with wind turbines and solar PV “farms” springing up all over the place.

 

These projects have been driven by subsidies and it these subsidies which have been blamed by major electricity supply companies for pushing up our energy prices and this subject has clearly become a “hot political potato”.

 

But, if we believe climate change is important, there is little doubt that significant financial incentives will be required over a long period to encourage the huge investment which is required to shift our energy supply chain away from fossil fuel based technologies to low or zero greenhouse gas emitting sources of energy.

 

It is believed the EU’s change in policy will still involve setting targets on the reduction in greenhouse gas emissions but countries will be given freedom on how to achieve these targets. This will cause concern in some quarters because the viability of many renewable energy projects is dependent upon the receipt of subsidies and provided there is confidence that the subsidies will continue then so too will investment.

 

It is believed the new target will be a 40% reduction in 1990 greenhouse gas emissions by 2030 but each country can choose how to achieve this, whether that be through investing in renewables, nuclear or perhaps by burning gas rather than coal for instance. As you can see this could result in a shift in emphasis away from renewable energy technologies if the government so wishes. This could have a effect farmers and landowners, many of whom have looked at renewable energy projects as a significant additional source of income.

 

It is too early to tell what impact if any the recent EU announcement will have on our domestic energy policy but a lack of certainty going forward is a concern highlighted by Jonathan Scurlock, NFU chief advisor on renewable energy and climate change. He said, “The failure to send a clear message to the renewable energy supply chain makes some investors nervous.” He went on to comment that the government showed a “lack of enthusiasm” for renewables while showing encouragement of fracking.

 

Clearly fracking is yet another whole subject which could have an impact on our countryside on which we do not have space to comment here but on which there will no doubt be many more column inches written in the coming years.

 

Carter Jonas’ energy team can provide advice and comment on any Renewable Energy proposals and for any queries in the South West please contact Thomas Ireland in their Wells office on 01749 683386.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk