Published on May 25th, 2012 | by Zachary Shahan5
HUGE Cut in 2020 UK Solar Target (Nearly 50% — from 22 GW to 11.9 GW)
May 25th, 2012 by Zachary Shahan
As many in the UK solar industry and elsewhere have claimed for months, the UK’s sharp and rapid cuts to its solar Feed-in Tariff (FiT) policy is projected to make it nearly impossible for the country to hit its 2020 solar target. In fact, amidst the positive news that the country is delaying its next round of solar FiT cuts and is making the whole program more predictable, it apparently tried to sneak through the fact that it has cut its 2020 solar forecast from 22 GW to 11.9 GW.
The change was included in the government’s impact assessment of the FiT cuts released yesterday (but, for some reason, was not trumpeted in the news release).
“The figures are significantly lower than those the government released when it launched the subsidy review in February, which forecast capacity would hit 22GW by 2020, with 3.3 million installations,” Business Green reports. Here’s more:
The February review based its ambitious predictions on a report by consultancy Parsons Brinkerhoff (PB), which said capital expenditure costs for new installations were likely to fall 10-30 per cent by the end of 2012, with further falls of 5-25 per cent in 2013-14, and smaller on-going reductions in 2015 and beyond.
At that time, solar insiders raised doubts about some of PB’s conclusions, including the rate at which capital costs would fall over the coming year. They also expressed concern that the report was rushed out over a few days in January, and as such offered only a snapshot of the industry.
The government’s new impact assessment (IA) now confirms the initial PB report had overestimated the rate at which costs will fall, leading to a lower central deployment forecast.
“At 11.9GW the central 2020 deployment projection is considerably less than the central estimate in the draft February [impact assessment] at 22GW,” the impact assessment states. “This is largely because PB’s estimate for the cost of large-scale PV installations is significantly higher than in their February report, and PB projects much slower reductions in installation costs from 2014 onwards than previously estimated.
“Furthermore, it is assumed that investor hurdle rates are higher than before, leading to less uptake at a given tariff.”
Figures from the solar industry reacted angrily to the news, accusing the government of attempting to conceal its downgraded forecast for industry growth.
This news again hurts many people’s confidence in the UK government’s honesty and predictability when it comes to solar as well as other industries.
However, solar industry leaders noted that they were still happy about yesterday’s announcement and the increased predictability that came with it.
Additionally, Paul Barwell of the Solar Trade Association noted that the cuts are coming not because of solar industry failures but because of their great successes in reducing the costs of solar.
“It is vital consumers understand tariffs can come down because the costs of solar have come down – there is a faulty perception out there that cuts mean solar doesn’t pay. In fact, solar offers similar returns today as when the FIT scheme began because the industry has been so successful at reducing technology and installation costs,” Barwell said.
Image: British flag via Shutterstock