Cost of UK Large-Scale Solar Now on Par with Fossil Fuels and Set to Drop

THE SOLAR TRADE Association (STA) has conducted a fresh assessment of large-scale solar costs which was explored with energy analysts and BEIS at an expert workshop this week.

The STA’s last assessment of solar’s Levelised Cost of Electricity (LCOE), published in November 2014, anticipated costs of around £80MWh in 2019. The updated analysis for 2019 shows that solar has gone beyond the STA’s earlier expectations with LCOE costs reducing to around £50-60MWh in 2019.

Although costs vary significantly on a site by site basis, the findings confirm that under a long-term power purchase contract, solar could soon be the cheapest electricity generation technology in the UK.

STA Policy Analyst, Nicholas Gall, who studied the costs over the past six months, said: “This is yet another example of the fast-moving solar power market outpacing official costs analyses. Our aim here is to provide an accurate assessment of where large-scale solar costs stand as we enter 2019, when we hope to see some revival of the UK large-scale solar market.”

Large-Scale Solar

Large-scale solar has been excluded from clean energy auctions in the UK since 2015, and the Renewables Obligation was closed in March 2017. The STA analysis presented at the workshop shows that solar can now deploy at around £50-60/MWh, making it highly competitive within the energy market, and attractive for commercial and industrial consumers under long-term Power Purchase Agreements.

The analysis also underscores the high potential in the UK for large-scale solar and its contribution to the economy, with imported modules likely to form just 10% of total lifetime costs by 2030.

The STA believe that a significant solar pipeline will re-start in the UK in 2019, assisted in the short term by developer needs to build out previously stalled projects. In the meantime, the STA says market outlook is supported by improved manufacturing efficiencies, higher gas price projections, and the UK’s growing need for clean generation capacity.

Three targeted policy measures to facilitate growth of the large-scale solar market have been released by the STA:

• Introducing a technology-neutral floor-price Contract for Difference auction
• Enacting network access and charging reforms to enable storage + PV to realise its full potential
• Providing a Climate Change Levy exemption for newly built zero-carbon generation procured through corporate renewable power purchase agreements (PPAs).

Solar Energy UK Chief Executive Chris Hewett

Chris Hewett, Chief Executive of the STA said, “We have a clear message for Government and corporate energy buyers today: UK solar electricity is now cost competitive with fossil fuels.

“By establishing the right policy framework for solar and storage, including expediting a smart, flexible energy system, government can enable this technology to realise its full potential in delivering an affordable, low-carbon future energy system.”

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