DECC must not repeat Germany’s solar cut mistakes, warns REC

The UK government should draw lessons from Germany’s solar policy cuts and not rush reforms to its large-scale support scheme, according to European PV manufacturer REC.

The Department for Energy and Climate Change (DECC) will end support for solar farms over 5MW under the renewable obligation policy from April 2015. Instead, the government will require projects to compete under the new Contracts for Difference (CfD) system. This would see projects compete with onshore wind, however the final details on the mechanism, including its budgets, are yet to be decided.

The Norwegian firm, which claims to be Europe’s largest module manufacturer, warned that the sector could struggle if changes did not give developer’s time to adapt.

“This market uncertainty is currently visible in the German solar market. Due to planned changes of the EEG on a short term notice, the solar market has shown a significant drop despite the fact that many solar installations remain attractive even under the new conditions,” the company said in a statement.

“Therefore, REC recommends that such changes shall be introduced with caution and sufficient lead time. Solar parks with system sizes over 5MW are long-term projects and require on average more than 12 months of lead time,” it said.

Bids under the new CfD system will have to be in place by October this year.

In a speech to investors earlier this week, climate change minister Greg Barker called the planned changes “calm and measured”.

DECC claims that a grace period for projects that have already made a financial commitment and have planning and gird connection in place, will soften the blow. REC questioned this.

“The extremely high requirements for solar projects already in progress to qualify for the proposed grace period – which ends on the same day as the announcement of the planned changes, May 13, 2014 ¬– are unrealistic and counterproductive for the whole market,” the statement said. “According to IHS, utility-scale solar projects are expected to make around 60% of the entire PV market in the UK in 2014. Therefore, changes impacting this segment will be crucial for the solar industry in all of the UK.”

The UK is forecast to be the largest market in Europe in 2014.

More than 200 projects are set to be affected by the changes.