By Makshudul Alom While the future of relations between the UK and the European Union hangs in uncertainty, many fear that Brexit might hinder the UK’s pursuit of cleaner energy, as it will no longer have to follow EU regulations. Despite the uncertainties, an unthinkable was achieved lately. For the very first time in the history of the UK, the installed capacity electricity from renewable energy has surpassed that of fossil fuels. The new generation capacity reached 41.9 GW, mostly thanks to growth in wind, solar and biomass. Unfortunately, the government has made some significant policy changes which might halt this unprecedented progress, particularly to the solar energy sector, and to the UK’s overall vision to achieve ‘Net Zero’ by 2050.
The solar energy sector has been undergoing phenomenal growth since 2011 and contributed almost 12% of the total electricity generated from renewable sources in 2017. Generating more than 12 GW/h, the United Kingdom is one of the top 10 countries for solar PV generation capacity. A significant drop in cost and enhanced capacity, coupled with the government’s incentives, has helped the sector to thrive while making a positive contribution to the UK’s economy. With its vision of installing 4 million household solar panels and creating a more eco-friendly energy mix, the UK government started several initiatives to support small families and large companies, so that more people and companies could invest in producing green electricity. Since electricity generation from renewable sources often requires heavy investment, it depends heavily on external support to make these initiatives sustainable. Load factor is also an important issue, which can cripple the production capability of solar energy. Load factor is a measure of how much actual capacity can be drawn from the power source; in this case the solar panels. As the load factor for solar is around 11%, it makes the system quite inefficient. An important question to ask is that, if the system is inefficient, then why do companies invest in it solar, or why does the UK government support it? This question has a somewhat complicated answer, but put simply: solar energy has no fuel cost and can provide a steady supply of electricity for almost 25 years with very minimum operational cost. Thus, governments have been supporting solar initiatives to make it more lucrative for people to invest. The UK government introduced the feed-in tariff scheme to support homeowners and individuals to transform their rooftops into a mini powerhouse. Since they would be generating their own energy, they would receive a generation tariff and energy saving tariff from the government. And, if they had surplus energy after consumption, they could sell it on and earn extra money. As a result, around 1.5 million houses now have solar panels. To attract the private sector, the government provides a special selling price, also known as the ‘strike price’, under the Contracts for Difference scheme, so that the companies can enjoy premium pricing over other technologies used in generating electricity for a certain period of time. Although the initial strike price for electricity from solar was around £79, the current rate is somewhere nearer £82, which is far greater than the wholesale price of electricity available in the market. However, things have changed quite quickly and the government has moved away from the initial promised support for solar energy. The FiT will come to an end in April 2019 and the government has not laid out any alternative plan, which will put millions of solar panel owners in jeopardy. Similarly, the large solar companies were barred from entering the second round of CfD negotiation in 2017, which has made the future of these large firms volatile. The government has also announced a policy around launching a capacity market, which will require that renewable-based electricity is traded in the wholesale market. Government has provided an incomplete justification of their position, by saying that solar technology has matured and does not require continued support from government. While no further directions being shared by the UK government, it is not only creating economic uncertainties for existing companies, but also putting up barriers to future potential investors. If this situation continues, the entire solar-based energy sector might witness slowed, if not negative, growth and all the good work of the last decade may have been in vain. Thus, the continuation of the government’s support is important in the short-term, so that a long-term plan for a sustainable transition to renewable-based energy, particularly solar, can be made.
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