Clouds gather over Solar Power after golden years of success

After a day in which Britain generated more power from the sun than from coal for the first time, the industry should be rejoicing. But the mood is fearful.

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Given that the government is determined to avoid playing a financial role in the planned new nuclear plant at Hinkley Point, it is perhaps surprising that it is involved in the UK’s largest solar array.

The 70-megawatt Lyneham photovoltaic farm – big enough to provide light and heat to 20,000 homes – is located at a former RAF base in Wiltshire owned and rented out by the Ministry of Defence.

Lyneham opened last summer with the help of private operator British Solar Renewables, but is only one of a series of projects that were planned for publicly owned sites. And it is good business.

Many associate Whitehall with the government’s recent cuts to solar subsidies, but the state has cashed in on a wider solar boom by providing land – as well as benefiting from the low carbon emissions that come from green energy.

Last week a milestone was passed when it was revealed that, for the first time, the sun provided more UK electricity from photovoltaic panels than heavily polluting coal-fired plants over a full 24-hour period. Just under 30 gigawatt hours – or 4% of national demand – was met by solar, the latest in a series of records set by the wider renewable energy sector in recent months.

In December wind turbines supplied 17% of Britain’s electricity demand while clean power sources in total provided almost a quarter of UK electricity in the first three months of this year.

The latest solar milestone was particular symbolic, as it was announced on the day that the world’s largest coalmining group, Peabody Energy, applied for bankruptcy protection in the US. And it is less than a month since Longannet, the last coal-fired power station in Scotland, closed its doors after half a century of power generation and the last deep coalmine in Britain shut at Kellingley.

The energy world is being revolutionised by a variety of factors, but undoubtedly the most important are based around the need to beat global warming and move away from fossil fuels and towards cleaner technologies. Governments of all hues have incentivised solar, wind and biomass while increasingly tightening regulations and costs around carbon-heavy coal.

Wind power has had the faster take-off in Britain, with the government continuing to provide major subsidies to support huge projects offshore. Solar – made up of many smaller facilities including thousands of household rooftop arrays – has been on a slower burn.

The record set when solar put coal in the shade resulted from the enormous decline in coal usage as much as the enormous growth in solar. But sun power has more than 9GW of installed capacity in place, out of a total of 80 to 90GW of total power capacity in Britain.

Peter Atherton is a hard-nosed energy analyst at Jefferies investment bank in the City of London with a keen interest in whether Britain can keep the lights on, and even he admits that solar growth in the country has been “explosive”.

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Power from Hinkey Point C will cost UK  92.50 Poundsper megawatt hour. Photograph  : EDF

And it is not just in Britain. Worldwide solar investment topped $160bn (£113bn) last year – more than gas and coal together. China alone is expected to add 100GW of new capacity in the years to 2020 while India will not be far behind.

The latest edition of the Economist declares solar could be a world-beater: “The intermittency of the sun will remain an issue. But if storage costs continue to decline, the possibility of combining batteries on land with energy from the giant battery pack in the sky could be unbeatable.”

The success so far has been driven by a combination of falling product prices – solar panels are 80% cheaper now than they were five years ago – but also by generous subsidies ultimately paid for by the consumer.

The British solar industry barely existed at the turn of the decade, with a tiny 65MW of capacity installed across the country. The introduction of the generous feed-in tariff (FiT) aid scheme in 2010 kickstarted a revolution. By 2011 around 1GW of solar had been installed, with this figure doubling over the next 12 months even though FiT rates had been cut in half.

By 2013, helped in part by the use of another subsidy scheme set up for wind, the renewables obligation (RO), large ground-mounted arrays began to be put in place. Solar capacity had burst through the 3GW level, rising to 9.2GW by the end of 2015. The industry now believes the figure is close to 10GW and could hit 11GW by the end of 2016.

But over the last year both the RO and FiT support mechanisms have been either removed or wound dramatically further down – with the government arguing the industry should largely be fending for itself while bill payers should be spared unnecessary cost.

A spokesperson for the Department of Energy and Climate Change (Decc) said: “Solar, nuclear, offshore wind and shale gas all have an important part to play in our future energy mix – this diversity is essential so we can deliver secure, affordable and clean energy for future generations.

“The costs of solar continue to fall and we are working to create a sustainable industry that delivers without subsidy.”

But the solar industry argues it is being abandoned at the worst possible moment – just a few years before becoming self-sufficient, and at a time ministers seem prepared to back much more expensive nuclear or offshore wind power projects.

As many as 2,000 solar jobs are estimated to have been lost over the last 12 months and Decc’s own worst case scenarios warn of 18,700 jobs on the line.

Lightsource Renewable Energy, the largest owner of solar assets in Britain, cut 25% of its staff last week, while other companies such as Absolute Renewable Energy and Eco Juice have just called in the liquidators. The biggest collapse came last autumn, when the Mark Group failed, leaving almost 1,000 jobless.

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