The Sun Has(n't) Got its Hat On!

News from the world of the Department of Energy and Climate Change (DECC) that its cutting off the Renewable Obligations (RO) subsidy for solar energy projects generating less than 5 MW of power from next March.  

There are also changes to the pre-accreditation of smaller schemes under the Feed in Tariff (FiT) as well.

Changes to the RO regime (and to FiT's) have been subject to plenty of rumour over the past few months and DECC made the announcements today.  No doubt the change is badged as part of the HMT Spending Review, but also because of the wild success of commercial solar project developments over the past few years.

The upshot?  Well most (all?) UK commercial solar schemes rely/require some form of subsidy in order to be viable and the RO as well as FiTs have been instrumental in turning the solar power supply on in this country.  

The change now proposed by DECC is effectively removing the legs from the public financial support base, with as much impact, if not more, than recent tightening of planning appeal decisions and planning policy on renewable developments (goodbye on-shore wind turbines in England) which has already made it much harder to get projects consented.  

How will investor confidence hold up against this systemic set of changes to the solar energy regime?  To say it might be 'dampened' is probably an under-statement; more likely this new Government position alongside the shifting policy and regulatory sands experienced in the last three-four years will cast a long shadow over future investments and long-term commitments.

Solar has an important, some might argue central, place not only in helping secure the UK's future energy independence but doing so in a sustainable way as well as harnessing large slices of overseas investment and supporting job creation along the way.  Are we in danger of losing most of the significant momentum towards greener energy and investment that has built up in the past few years?

DECC are consulting on the proposals during the summer until early September (while we are all off getting sun burnt), but as with previous similar consultations there is probably a very slim chance that any real change to the Government's approach will materialise as a result of the consultation.  

Still its better to say something than not while there is time and here's the full consultation document to read when you aren't on the beach:  https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447321/Solar_PV_within_the_RO_consultation.pdf

Mike is MD of Chilmark Consulting and also a Director at Adamian Green a renewable energy advisory and development company.