The government now estimates that in the absence of intervention, 6.6GW-10.0GW of solar PV could deploy under the Renewables Obligation (RO) by the end of 2016/17. The cost of this would vastly exceed the Levy Control Framework cap. Therefore, changes are required to the funding of solar PV.
As proposed in the consultation document, the government has decided to close the RO to solar PV projects of over 5 MW in England, Wales and Scotland from 1 April 2015. This closure will also apply to additional capacity added to existing accredited stations from that date, where the station is, or would become, above 5MW.
For large scale projects due to commission after 31 March 2015, developers will now have to look at the viability of securing an appropriate level of support under the Contracts for Difference (CfD) regime. DECC has published the budget notice for the first CfD allocation round, which started on 16 October 2014.
There will be a grace period to enable developers who have already made a substantial investment in a scheme to benefit from support under the RO. In order to benefit from the grace period, a significant financial contribution must have been made on or before 13 May 2014 (either in relation to a new station or additional capacity at an existing station).
Stations that qualify for a grace period must commission and accredit under the RO no later than 31 March 2016. Evidence must be provided to Ofgem by 31 March 2015, showing eligibility for the grace period.
Following responses to the consultation, the forms of evidence that will be required has been changed from that which was originally proposed to:
In acknowledgment of the fact that several respondents raised the issue that, even where the other requirements for a grace period (set out above) are met, there may be cases where there is a delay in getting a grid connection offer, the government issued a consultation in which it was proposed that there be an extension of 3 months to the grace period. This consultation closed on 24 October 2014.
The RO will be kept open for new solar PV projects at or below 5MW until 31 March 2017. However, the government has left the door open to change this if there are indications that deployment is growing more rapidly than expected (meaning that the government can no longer afford to subsidise such schemes through the RO).
Other decisions set out in the consultation response:
The consultation proposed that for an installation of over 250kW to be considered as other-than-stand-alone it must demonstrate that there is potential for at least 10% of the installation’s energy produced to be used on-site, through either one building or multiple buildings to which the installation is wired. The consultation closed on 24 October.
Contributor: Alexandra Holsgrove Jones