Proposed UK Policy Changes Cause 215 Solar PV Farm Prospects to Be Re-Evaluated, According to NPD Solarbuzz

Santa Clara, California, May 21, 2014—The outcome of proposals for 215 ground-mounted solar photovoltaic (PV) farms in the United Kingdom, with capacities in excess of 5 megawatts (MW), are now being re-evaluated, according to findings in the NPD Solarbuzz UK Deal Tracker. This re-evaluation follows new, and unexpected, proposals from the U.K. government to adjust incentive mechanisms for ground-mounted solar PV farms beginning in April 2015.

“Ground-mounted solar PV capacity deployed in the U.K. has exceeded 2 gigawatts during the past two years,” noted Finlay Colville, vice president at NPD Solarbuzz. “While there was no official cap placed on ground-mounted PV solar farms, recent installation rates appear to be well above the levels the government was expecting.”

The proposed changes from the U.K.’s Department of Energy and Climate Change (DECC) include restricting Renewables Obligation Certificates (ROCs) to new solar PV farms below 5 MW in size, beginning in April 2015. Previously, the U.K. industry assumed ROCs would be available to any size of ground-mounted solar PV farm, until March 2017.

“If the proposed changes by the DECC go ahead, it will force investors and developers of large-scale solar farms in the U.K. to shift to the Contracts for Difference scheme, two years earlier than expected,” added Colville. “Combined with the threat that ground-mounted solar farms that remain on ROCs could have a capacity-based degression mechanism imposed, the prospects for U.K. solar farms can now be divided into three new size categories.”

Small-scale solar farms, below 5 MW, have access to 1.4 ROCs until 31 March 2015, with no cap on the cumulative level deployed. Between April 2015 and March 2017, this size category is expected to remain on previously-outlined ROC banding levels for ground-mounted solar, but could eventually be subject to capacity-based limits, in an attempt to curtail excessive ground-mount deployment under ROCs.

According to the NPD Solarbuzz UK Deal Tracker, there are currently 81 solar PV farms in the 1 MW to 5 MW range that could be completed under the ROC scheme, with 45 applications already approved. Renewed focus on small-scale solar farms can now be expected, especially from Small and Medium-sized Enterprises (SMEs) that remain cautious about the operational risks in shifting from ROCs to the untested Contracts for Difference (CfD) scheme.

Mid-scale solar farms, above 5 MW and below approximately 30 MW, are the group most at risk from DECC’s recent proposals. After March 2015, this size category would be unable to access ROCs, and will be potentially too small to justify inclusion by project developers within the CfD auction process; therefore, many of the projects in the 5 MW to 30 MW range now have a potential hard-stop date of 31 March 2015.

Having been the main size category driving recent ground-mounted solar PV activity in the U.K., the pipeline for 5 MW to 30 MW solar farms has grown to 198 projects. More than 80 of these projects have full planning consent, with most of these identified in the NPD Solarbuzz UK Deal Tracker as likely to be completed before April 2015.

Plans for projects in the large-scale size category, above 30 MW, have become more common in the past two years. So far, four sites above 30 MW have been completed under ROCs, with 17 more applications submitted for planning review within the past 18 months. “Developers need to decide quickly which projects can be fast-tracked for completion under ROCs before April 2015, which are viable under CfDs, and which should be terminated,” Colville said.

Figure: Segmentation of U.K.’s Ground-Mounted Solar PV Pipeline

Source: NPD Solarbuzz UK Deal Tracker

“Understanding the current pipeline of ground-mounted solar farms in the U.K. has now become essential,” Colville continued. “Investors and developers need to re-assess the risk profile of their projects under the adjusted-ROC and CfD schemes. Engineering, procurement, and construction firms, or EPCs, will reap the greatest rewards by focusing on near-term opportunities for small and mid-scale projects. Suppliers of components will need to understand which projects are likely to be prioritized and which will be terminated.”

For more information about the NPD Solarbuzz UK Deal Tracker, contact us at one of our seven global locations, email us at contact@solarbuzz.com, or call Charles Camaroto at 1.516.625.2452.

About NPD Solarbuzz
NPD Solarbuzz, part of The NPD Group, offers North America PV Markets Quarterly, Marketbuzz, Solarbuzz Quarterly, and other upstream and downstream photovoltaic (PV) market quarterly reports, providing the solar energy and PV industries with global historical and forecast data for the PV supply chain. For more information, visit www.solarbuzz.com or follow us on Twitter at @Solarbuzz.

About The NPD Group, Inc.
The NPD Group provides global information and advisory services to drive better business decisions. By combining unique data assets with unmatched industry expertise, we help our clients track their markets, understand consumers, and drive profitable growth. Sectors covered include automotive, beauty, consumer electronics, entertainment, fashion, food/foodservice, home, luxury, mobile, office supplies, sports, technology, toys, and video games. For more information, visit www.npd.com and npdgroupblog.com. Follow us on Twitter at @npdtech and @npdgroup.

NPD Solarbuzz and Marketbuzz are registered trademarks of The NPD Group.

 

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