Author: Solar Power Portal

Public to private: Does the latest subsidy-free solar farm offer a bridge to future deployment?

Since Anesco announced with fanfare the completion of the UK’s first subsidy-free solar farm in September last year, many eyes have been trained on the solar sector to see who would be next to achieve what has so far proved elusive to many developers.

While Anesco had said it would follow Clay Hill with as many as five further sites, the 10MW solar farm with a 6MW battery has yet to be repeated by the company, while others are likely to bring theirs forward next year.

It was therefore unexpected when the UK’s second subsidy-free site was revealed last month, not by an experienced developer utilising supply chain relationships and revenue modelling to land on an economic model that worked, but by a local authority utilising its own unique position to build out a site.

As reported by Solar Power Portal last month, the Westhampnett solar plus storage site was commissioned in mid-October, combining 7.4MW of solar using panels from Hanwha Q Cells, with a 4.4MW/4.06MWh Tesvolt battery storage, and solar and battery inverters from SMA.

Despite a 10 week set back after the company’s principal contractor Carillion went under, the project was picked up by Arun Construction – already involved as designer of the PV and battery scheme – and completed alongside Smith Brothers, which was contracted by West Sussex County Council to connect the Westhampnett solar farm to the electricity distribution network.

It will make its money for the council in four principle areas, beginning with the generation from the solar farm which will be repurchased from Your Energy Sussex, a council-backed energy supplier set up in 2014. This will be used to power the local authority’s operations, while some will also be used to charge the battery.

This will be combined with grid power purchased during periods of low pricing to be sold back at times of demand under an arbitrage model. The battery will also be used to provide Triad avoidance and deliver capacity market contracts, while a demand side response agreement has also been secured with nPower which will use the battery to access the grid services market.

This follows the general trend for battery projects and is expected to make multi-million pound income over 20 years, but it is this timeframe that separates the project from those that could follow it.

This was remarked upon by Finlay Colville, head of market research at SPP’s publisher Solar Media, in his recent blog, who essentially discounted the significance of the project in his analysis of how subsidy-free solar farms are to be built up in the coming years.

“Are we really to believe that a local council (not entities known for their supreme fiscal prudence) is going to be front-runner in UK large-scale post-subsidy build-outs! The Westhampnett site had been in the planning for several years, and was fundamentally an exercise in sustainability-target driven marketing euphoria.”

Including Anesco’s site, he went on: “In isolation, neither of the above sites would likely have passed any due-diligence analysis by an external investor, and should not be considered for inclusion in a discussion of how the UK has reacted to the removal of FiTs, ROCs and CfD incentive mechanisms for solar sites in recent years.”

Far be it from me to dispute Mr. Colville’s comments – which are far more informed than my own – however there is something to be said on the external investor comparison; does it need apply?

Public bodies versus external investors

As Westhampnett’s project lead and senior advisor to West Sussex County Council, Tom Coates, told SPP: “You’ll struggle to find investors that would be investing in battery schemes of a significant size because the returns aren’t guaranteed to be within ten years or whatever an investor will be looking to get.

“Local authorities are well placed in that regard because they’re not going anywhere as entities so that stands aside from the commercial developer model. The ability and the will to play the slightly longer game is significant.”

This was supported by Christian Went, key account manager at Tesvolt, who added: “Public bodies don’t think in financial quarters like other investors. A storage system with a service life of 30 calendar years, as ours has, is ideal to meet the requirements for a solution which serves tax payers in the long term.”

So yes, Westhampnett does not offer too many applicable lessons for the normal players in the UK solar market who do not have access to ownership over a 35-acre former landfill, or the patience to wait 20+ years for their money. But these are the people still struggling to put a business case together, while councils like that in West Sussex are able to utilise their resources and crack on with projects – providing lessons for other councils to follow.

To discount them from any analysis of the UK’s future in solar could therefore be considered a slight oversight of the work they are carrying out, particularly in a year when a new local authority category was announced for future Solar Power Portal and Energy Storage News Awards, named after the late councillor Alan Clark who worked tirelessly to develop solar projects in Nottingham that only a council could have carried out.

Councils are doing it for themselves

As Colville stated, councils are fiscally shy – not least as a result of continued cuts to central funding – and so for a local authority like West Sussex County Council (and a Conservative one at that) to take on solar and storage shows the level of confidence in the technology for its economic, as well as, environmental benefits.

But as council leader Louise Goldsmith told SPP, councils can look in their own jurisdictions to see if such an opportunity is available to them.

“To be really effective on sustainable energy you need to look what’s in your back yard so although we’re the second wooded county, we’re also the sunniest county in the country so why wouldn’t you look at investing and developing local energy? Not only is it green and clean which is very important, it actually feeds into the grid and the country needs energy,” she said.

“As the business case stacks up and gives us the revenue, and in this case on land that was going not to be used for 20 years, why wouldn’t we invest in that?”

The ‘why’ for the external investors Colville’s blog was concerned with is around this timeframe, and the fact that there remains more risk than many are comfortable with having had a decade of government-backed subsidy payments to rely on. Accusations of laziness have been levelled at the investment community as a result, but it can hardly be said that councils do not also face some concerns over their investment decisions – maybe even more so as a public body.

“We did have additional scrutiny, there’s no question,” Coates said.

“The income being derived from the batteries is less but we’ve always been upfront about it in that there is additional risk there in terms of it not being a feed-in tariff comparable income stream, however the income could be significantly more than we’ve profiled. The opportunities around in the market have inherent risk but having said that, we had additional scrutiny and it was positive by the end of it.

“Even with all the challenges we’ve had with Westhampnett there is significant appetite here for other investment in other sites.”

Goldsmith added: “If we’ve got more landfill sites and they are suitable and we can plug the energy in [then] yes, we’ll be looking at other sites. We have another one coming up which we hope we will be developing out shortly.”

This ‘other one’ is a 36MW battery being planned, with the possibility of solar to boot, for another site that only a council could build on. Potential like this is not available to external investors, who of course will be at the forefront of developing subsidy-free propositions well into the future.

But councils are doing it now, playing the role of ‘leading lights’ in UK solar, and will no doubt continue to do so, building out projects that no one else could, adding a touch of the personal to what investors no doubt see now as a financial and economic problem to crack.

Goldsmith said: “It’s a big deal for me and the council, I’m immensely proud of this project and it’s very near to my heart,” – I can’t wait for such sentiments to come out of the investment community in the UK’s subsidy-free future.

UK’s second subsidy-free solar farm completed by West Sussex Council using battery storage

The UK’s second subsidy-free solar farm, and the first by a local authority using battery storage, has been completed by West Sussex County Council in a project that ticked “every box” and will generate significant income over the next 25 years.

The Westhampnett project combines 7.4MW of solar, comprised of panels from Hanwha Q Cells, with a 4.4MW/4.06MWh battery storage unit from Tesvolt on a closed 35 acre landfill site close to a local grid connection and owned by the council, offering low land costs for the project.

It is the second solar farm to be completed by West Sussex Council following the 5MW Tangmere project, which began operation in October 2015. However, where that site is supported by legacy subsidy payments, Westhampnett has been built purely on the back of an unsubsidised business case.

Generation from the solar farm will be repurchased from Your Energy Sussex, a council-backed energy supplier set up in 2014, to power the local authority’s operations, while some will also be used to charge the battery.

This will be combined with grid power purchased during periods of low pricing to be sold back at times of demand under an arbitrage model. The battery will also be used to provide Triad avoidance and deliver capacity market contracts, while a demand side response agreement has also been secured with nPower which will use the battery to access the grid services market.

Louise Goldsmith, county council leader, said: “I am delighted to see the completion of Westhampnett solar farm. Living in the sunniest county, it makes absolute sense for us to use our natural resources and to generate clean energy that can be fed in to the local electricity grid.”

Speaking to Solar Power Portal this morning, she added: “We opened our first solar farm at Tangmere a couple of years ago and of course we had the benefit of the FiT. Now we haven’t but the economics are still good and each solar farm is done on its business case.

“This hits so many buttons in the fact that it’s green, its clean, it’s a use of land that is not going to be used elsewhere, we’re putting energy into the grid that is needed nationally and we’re also making some money on it. So on ticking every box it really does that.”

The project was not without its difficulties in being developed, with now defunct construction giant Carillion having been appointed as the principal contractor. Following the company’s collapse in January, work on the site was stopped for 10 weeks until a replacement could be found in Arun Construction, which was already involved in the project as designer of the solar and storage elements, while Smith Brothers delivered ICP services.

The business case behind the project also fell under more scrutiny as a public sector investment, but according to senior advisor and project lead Tom Coates, the long term approach open to the council meant it was well placed to deliver the scheme.

“It’s a political organisation so there will no doubt be differences of opinion in what the council should be investing in. But it is significant that people are supportive of schemes like this and thinking, like all councils, quite differently about maintaining income streams to maintain critical services,” he told SPP.

“You’ll struggle to find investors that would be investing in battery schemes of a significant size because the returns aren’t guaranteed to be within ten years or whatever an investor will be looking to get. Local authorities are well placed in that regard because they’re not going anywhere as entities so that stands aside from the commercial developer model. The ability and the will to play the slightly longer game is significant.”

Goldsmith added: “I’m immensely proud of this scheme and the work that all the officers have done to bring it to fruition because it is the absolutely right thing to do. Every area or county has to look at what they’ve got and when you are a very sunny county its mad not to look at what’s in your back yard and utilise that in a clean and green way and that’s exactly what we’ve done.

“To me it’s a perfectly rational thing to do if the business case stacks and we’re not going to stop here. We’re looking at further investment.”

Following the success of the Westhampnett project the council already has further projects in the offing, either co-located solar-plus-storage or standalone batteries. Plans are in motion for the >£500,000 36MW Halewick Lane energy storage project, which is soon to be entered into planning and is expected to be decided in March 2019.

New revenue streams open for solar-plus-storage as Anesco makes Balancing Mechanism debut

‘Hybrid’ solar plus storage developments should become a key new area of interest for investors according to Anesco after the company’s subsidy-free solar project was used in the Balancing Mechanism (BM) for the first time last week.

Anesco is celebrating the success of its battery assets being the first to enter the BM via Limejump’s Virtual Power Plant, marking the first time an aggregated unit was allowed into the BM.

Breach Farm, a 10MW standalone battery storage site in Derbyshire, was the first to be called upon and was later followed by Clay Hill, the unsubsidised 10MW solar farm complete with 6MW co-located battery storage.

Steve Shine, executive chairman at Anesco, said: “We’re delighted that we’ve been able to achieve another first for the UK renewables industry. By entering our storage assets into the Balancing Mechanism, the door has been opened to additional revenue streams for investors and further validates the opportunity that battery storage provides.

“It’s a major step forward for the industry, with the Balancing Mechanism market offering frequent instances of profitable spreads for batteries to take advantage of. In addition, it removes much of the risk that suppliers face from uncertain system prices.”

Following these new landmarks for battery storage, Anesco’s commercial operations director Lily Coles explained to Solar Power Portal that entry into the BM by a battery charged on site by solar is more cost effective than a standalone battery importing from the grid.

“With the [Clay Hill] battery, you’re not having to buy power in order to discharge within the BM. A huge issue you have with batteries at the moment is the import charges [which] you’re avoiding by using the solar generation.

“So we really can’t see why investors won’t be going for [that] hybrid solution because it’s got so many advantages to it. The strike price that you have to enter Breach Farm as a standalone battery is a lot higher than Clay Hill because Clay Hill can make the same spread by using the renewable generation,” she said.

The new entry for Clay Hill into the BM tops off a successful summer for the project, which according to Cole is “exceeding all our expectations.”

Owing to high irradiation over the summer months, combined with a lack of wind generation and reduced output from French power stations leading to higher electricity prices, solar generation from Clay Hill was able to sell for an average price of £56/MW.

However, Anesco’s key achievement, according to Coles, has been opening up a new revenue in the BM for both standalone and ‘hybrid’ battery projects following work with Cornwall Insight to develop alternative revenues following the decline of frequency response and Capacity Market returns.

“The key point for us in being able to have the first battery in there is demonstrating and opening up that new revenue stream for batteries and then building up that case data to provide more security to investors by demonstrating where they can make their returns.

“That’s the significant milestone; it’s finally been opened up and is now an opportunity for batteries to enter into,” she said.

Limejump was able to offer this access and expects opportunities to grow as the year progresses, offering more opportunities for revenue.

While both Breach Farm and Clay Hill would called upon as singular entities, they remain within BMUs housing a number of carrying assets which will likely be called on together as National Grid’s needs increase.

Joshua Greedy, head of marketing at Limejump, told SPP: “When we get into winter for sure it’s going to be multiples I think as you’ll have increased frequency deviations because of the requirements for heating and hot water etc. creating more fluctuations.”

Coles added: “The opportunities under the BM are huge. If you look at National Grid and the National Infrastructure Commission, they’re saying the opportunity could double by 2021 in the BM alone.

“National Grid were really happy with Breach Farm last week and even they were saying they could see batteries dominating that market, [but] it depends how quickly people install batteries.”

While Limejump was able to secure early access to the BM with aggregated units owing to special dispensation from Ofgem, National Grid’s efforts to widen access to the BM are expected to be completed by April 2019. This will open up the market to those aggregators without a supplier licence, as well as single flexibility providers with capacities as small as 1MW.

BayWa r.e. appoints new UK lead to take up ‘tremendous opportunity’ in the UK

BayWa r.e. has appointed former RES managing director Gordon MacDougall to head up its UK projects business as the company eyes the developing market for subsidy-free projects.

As managing director of the UK division, MacDougall will have primary responsibility for the leadership and development of the business while playing ‘a key role’ in driving forward BayWa r.e.’s investment strategy in the UK.

MacDougall joins having already built up considerable experience across the renewables sector, including as managing director, Western Europe for RES UK & Ireland. He also held a senior position at ScottishPower Renewable Energy and spent three years as vice chair of Scottish Renewables.

“Attracting someone of Gordon’s calibre into the business is a great endorsement of our strategy and confirms our continued growth ambitions for our UK business,” said Katy Hogg, global co-head of wind projects for BayWa r.e.

She added that the company hopes to take advantage of “a tremendous opportunity” in the UK for growth as the market transitions towards subsidy-free low carbon projects.

Speaking about his appointment, MacDougall added: “We are in an excellent position to capitalise on the growth opportunities presented by falling capital costs for renewables and continued industry support to achieve a truly low carbon economy in the UK.

“BayWa r.e.’s reputation, company values and proven project delivery capabilities are assets that I believe will continue to support our success in this evolving marketplace, and I am excited to be on board and part of the great team that will take our business to the next level.”

To date, BayWa r.e. has brought forward over 323MW of solar projects in the UK, as well as several wind and biomass projects, and has over 1.3GW of renewables projects under management for third parties.

NextEnergy Solar Fund pursues ‘new era’ of subsidy-free solar following ‘challenging’ year

NextEnergy Solar Fund (NESF) has placed subsidy-free solar developments in the UK firmly in its crosshairs after what it labelled as a “challenging” period for growth and expansion.

The investor, which remains one of the largest holders of UK solar assets, released its annual results for the year ended 31 March 2018 yesterday, reporting a pre-tax profit of £32.2 million.

But of greater significance was NESF’s admission that growth had been harder to come by in the UK market as competition in the secondary market intensified, forcing the company to look for opportunities elsewhere.

This, coupled with continuing technology cost reductions and growing maturity of business models, has led NESF to explore what chairman Kevin Lyon termed a “new era of subsidy-free solar in the UK”.

He added that the company now held asset development rights for prospective subsidy-free solar developments in the UK amounting to 172MW of capacity, assets which NESF has previously said it intends to develop sooner, rather than later.

Lyon added that NESF had “several options” in the space, including taking full ownership of a plant’s development from planning to commissioning. While NESF has not typically been associated with asset development, the company said it would, in doing so, take control of the entire value chain and increase its potential returns while mitigating risk.

The company also embellished on details relating to asset performance which, while broadly as expected throughout the year, was impacted by DNO outages, theft and weather patterns earlier in the year.

The 5MW Hall Farm asset recorded performance 19.2% below expectation as a result of 43 days of DNO-related outages required for “extraordinary maintenance activity” on the distribution grid.

The same site was further hit by a component theft at the beginning of March which caused its availability to fall to just 47% for a 25 day period. NESF said it was confident an ongoing insurance claim would be successful.

Weather patterns in March were also blamed for a fall in irradiation – some 18% lower than in March 2017 in the UK – with the lasting effects of the so-called ‘Beast from the East’ impacting portfolio performance.

Wirsol moves towards 150MW subsidy-free target with two new projects

Wirsol Energy has taken a step closer to its 150MWp subsidy free development plans after picking up the project rights to 47MWp of solar across two large-scale projects in Lincolnshire.

Commencement of the Low Farm and Sweeting Thorns solar parks is expected to begin in Q2 2018 and means Wirsol has added a further two projects to its previously planned six to be built over the next 12-18 months.

The company announced in December it would build out two other projects – the 7MW Outwood Solar Farm in Essex and the 9MW Trowse-Newton Solar Farm in Norfolk – at the start of this year, backed by long-term power purchase agreements (PPA).

This means the developer has 63MWp secured towards its 150MWp target for subsidy-free projects across the four that have already been announced, with two more expected to make up the remaining 87MW.

Wirsol added that the two projects announced today mean it has achieved circa 67% of the overall anticipated portfolio for this year.

Mark Hogan, managing director at Wirsol Energy, said: “We are delighted to have secured the projects rights of over half the proposed portfolio. Our UK procurement and technical design teams combined with our long-lasting partnerships have collectively made the non-subsidised solar journey possible.

“We strongly base our success on our adaptability and competence to react in alignment with market conditions. The acquisition of all four subsidy free solar parks to date (Low Farm, Sweeting Thorns, Outwood Phase II and Trowse Newton Phase II) at a total of 63MWp, validates Wirsol’s ability to perform resourcefully whilst driving revenue.

“We are all now focused and excited to proceed onto the construction stage of these projects which will commence imminently. Our extensive pipeline remains in development which will complete our first non-subsidised portfolio here in the UK.”

All of the planned six projects will be designed to accommodate the addition of solar storage in the forthcoming future, which will be considered as ‘phase II’ of the projects.

Peter Vest, managing director of parent company Wircon, added: “The UK team have made some remarkable progress into the non-subsidised solar market; these projects are an exciting step which mark the beginning of our first UK subsidy free portfolio.

“Wirsol Energy are reaching extraordinary milestones in both the Southern and Northern hemispheres and play an important role in the Wircon brands international growth strategy. The future is set to be rewarding for all parties.”

The UK announcements follow the launch of an initial public offering (IPO) of its Australian portfolio under the newly formed company Bright Acre Energy.

How post-subsidy UK solar will benefit from next-generation PV modules

The UK solar industry currently has 8.3GW of ground-mounted large-scale (>250kW) solar farms installed, across almost 1,200 sites, the majority of which are over 5MW in size.

Until now, module selection has been seen by many as a commodity affair, often driven by minimising project capex, and less focused on the quality and reliability that ultimately underpin returns for long-term asset holders and investors.

This article explains how the next phase of UK solar growth will see changes in module supply and energy-yield capability, owing to the rapid changes in the module supply landscape and the new technologies now coming through in mass production, and how this will impact the design of solar farms and the module suppliers that will be driving this.

The topics and conclusions are set to be explained clearly at the forthcoming PV ModuleTech 2017 conference in Kuala Lumpur, Malaysia on 7-8 November 2017, as discussed in a recent feature on the PV-Tech website – How to find high-performance bankable quality solar modules with minimum risk – accessed through this link.

Module selection in the 8.3GW installed UK capacity

In looking at the 8.3GW of ground-mount capacity in the UK today, installed during 2011-2017, alarm bells start ringing in terms of some of the module suppliers used that have either gone insolvent, no longer have any global presence, or simply outsourced the module build.

Let’s look at some of the module selection during different phases of UK solar farm build, excluding selection from the current crop of global bankable module suppliers to the industry that have featured prominently in the UK so far: JinkoSolar, JA Solar, Trina Solar, Canadian Solar, Hanwha Q-CELLS, First Solar and REC-Solar.

During the initial 2011-2012 growth phase in the UK, module suppliers such as A-Sun, Miasole, Solon, Sunowe, and Solarwatt featured on a number of the solar farms installed in the UK; companies not currently widely recognised as leading players in global utility-scale solar farms. Indeed, today, solar farm assets using these modules are held by firms such as Foresight, Lightsource, and John Laing.

During 2013-2014, large-scale solar farms were also constructed using modules from suppliers such as ZNShine, Jetion, Tamesol, Axitec, Phonosolar, and Solibro. There were also a number of prominent sites that used modules from LDK Solar, China Sunergy and Yingli Green; companies that were either forced to delist from US stock markets or have undergone significant operational and financial restructuring in China in recent years. Asset holders of these sites today include Octopus, Foresight, TRIG, NextEnergy, John Laing, and Downing.

As the UK solar industry matured, the 2015-2017 phase continued to see strong shipment levels from the likes of Trina Solar, JinkoSolar, JA Solar, Hanwha Q-CELLS, REC Solar, Canadian Solar and First Solar, as the country was a priority for the largest and most credible global module suppliers of recent times.

However, a large number of sites also featured modules from Astronergy, BYD, Jetion, Phonosolar, Risen, Talesun, Tata Power, Suntech and Yingli Green.

Aside from the choice of module technology, the entire 2015-2017 period was also overlapping with the European MIP restrictions, with many suppliers withdrawing from the MIP. This was largely due to these companies having supply channels outside China that negated the requirement to sell at MIP levels to the EU.

But in looking at the module suppliers above, it is interesting to note that many of the suppliers do not have cell or module manufacturing located outside China: BYD, Jetion, Phonosolar, Risen, Suntech, and Yingli Green. Indeed, even Anesco’s Clay Hill solar farm (the first ‘post-subsidy’ site built in the UK) was done using modules from one of these companies (BYD).

While often hard to get the exact details, this would imply that many of the solar farms built in the UK used modules supplied by companies in China that simply outsourced cell and module to other companies located in Southeast Asia, and possibly concentrated in Vietnam.

Virtually every major asset owner of solar farms in the UK is holding sites today that will have been built using modules produced and supplied in this manner.

Who is doing the due diligence on module selection?

The sub-title here must surely be a question that comes up when discussions take place between final asset holders and assigned O&Ms on the thorny issue of performance ratios and energy yields from sites not meeting original expectations.

The most diligent process here is when leading certification labs, factory auditors and independent engineers are engaged before the build process, looking specifically at the sites where the modules will be produced and performing qualified due-diligence on the company’s technical and financial credentials, right down to the exact bill of materials and module inspection auditing for every module to be delivered on-site.

The reality in the UK however is not uncommon with many other markets until now, where the priority was not assigned to the above-noted rigorous process. Module selection often occurred well before the involvement of the investors and long-term asset owners that have the most to lose over 25-30 years.

Choosing modules based on outdated factory audits (often not even where the cells or modules are eventually produced), or running off some misleading Tier-1 fantasy league table, does seem to have been the modus operandi of many site builds, justifying the drive to minimise module-related capex and maximize profits during short-term flipping to the next site owner in the chain.

The need for increased awareness today

Aside from simply making sound long-term business decisions into what is ultimately the most critical component of a solar farm asset, other factors are now playing a decisive role in module supplier and module type selection in the industry; and this is certainly going to have a major impact on the post-subsidy solar farms that will be constructed in the 2018-2020 period in the UK.

First, it is important to know the module suppliers that are leading global markets with GW-levels of shipments, and are becoming the companies to align with for long-term relationship-building of solar sites constructed outside China. Most of these companies have manufacturing now established for cells and modules overseas, in new state-of-the-art facilities in locations such as Malaysia.

Companies that only have cell/module production sites in China today are largely focused on their domestic market (that will install a staggering 40-50GW this year alone), and continue to operate a (lower priority) sub-contracting route (often via Vietnam) to serve end-markets in Europe and the US.

However, by far the most important piece of homework that project developers of post-subsidy sites (and asset-holders/investors that are seeking to expand existing UK-based solar portfolios) can do is to get technology savvy.

Module performance is changing rapidly today, having been through a period of 3-5 years when minimal upgrades were performed and where the biggest change was simply seeing 60-cell p-type multi panel ratings increasing from 250W to 265W.

The industry is shifting to mono, increased use of 72-cell panels, and process-flow based upgrades are coming through with PERC-based options and (shortly) bifacial modules that offer the prospect of generating electricity from both sides of the solar panel. The potential site yield benefits are significant here when dealing with modules rated 350-400W.

In this respect, it is perhaps even more critical to understand who the credible (bankable) module suppliers of these new mass-production modules are, how site design needs to be planned in order to maximise energy yields, and what is the route to minimising risk by engaging with the best certification labs, factory auditors and independent engineers capable of auditing these suppliers and technologies.

With post-subsidy economics being not simply driven by cheap build-capex, but more about 30-year return-on-investment, understanding the above issues could well be the make-or-break of many sites coming to fruition in the UK in the coming years.

PV ModuleTech 2017 to explain this clearly

It should be mentioned of course that these issues are not UK-centric: they exist in every global solar end-market today. So developers based in the UK and investing in solar sites overseas have even more to gain by getting up to speed quickly.

Until now, there has been no industry forum designed specifically to address the above topics by explaining the key issues from the relevant stakeholders involved in GW-level global module supply, module bill-of-materials selection, factory auditing, panel certification and supplier/technology bankability analysis.

This was the driver behind the PV ModuleTech 2017 conference, organized by Solar Power Portal’s sister platform, PV-Tech, and due to be held over two days in Kuala Lumpur, Malaysia on 7-8 November 2017.

The event will hear from top-10 global module suppliers to the industry today, outline what is important for the new module technologies coming through in mass production, and see the leading certification labs, factory auditors and independent-engineers describe how and why module supplier and technology choice is vital to minimize module risk on-site. The content and scope has been tailored specifically for developers, EPCs, investors and asset-owners.

Details on how to get involved or attend the PV ModuleTech 2017 event can be found here.

Aberla sets sights on grid-parity solar and ‘booming’ storage

Aberla’s new leadership is targeting significant growth in both solar and storage markets, considering the former to be at grid-parity and the latter to be “on the cusp of a boom”.

Last week Aberla announced that it had appointed former Forest director Paul McCarren as its new managing director, coinciding with new investment and an imminent rebrand.

Speaking to Solar Power Portal, McCarren revealed that he had been poached by an investor in Aberla to take the contractor “to the next level”, with commercial-sized solar plants and other energy technologies, including battery storage, high on the agenda.

In his seven years at Forest, the energy division McCarren started grew to a business with around 250 staff and £30 million in turnover. McCarren said he wanted to replicate that kind of success at Aberla and had recruited some of his former staff to do so.

And solar will, predictably, play a “significant” role in Aberla’s future.

“PV was a big part of Forest Energy and it’ll be a big part of Aberla going forward. We’re talking to a number of large clients in the multi-megawatts stage at the moment,” he said.

This interest will be in both ground-mount and commercial rooftop projects, with McCarren insisting that subsidy-free projects are a distinct reality for the UK market at the moment.

“Everyone talks about grid parity. We feel that we’re here now. With the price we can offer per kilowatt installed, clients [are] shown very good returns on their money,” McCarren said, adding his belief that ground-mount projects for corporate clients under certain circumstances can achieve payback periods of seven or eight years.

Solar’s cause, McCarren said, was being aided by utilities putting prices up across the board.

Aberla currently has a staff of around 20 individuals but expects this to increase to around 35, with further sub-contractors to be hired on a job-by-job basis.

Solar work will be supplemented by so-called ‘grid energy’ work, which Aberla classes as projects made either in support of the national grid or those which alleviate effects of grid constraints, charges or outages.

Placing battery storage and peaking plants in this category, McCarren said he felt the market was “on the cusp of a boom”.

“We’re very close to either batteries or peaking plants taking off very rapidly. We’re all jockeying and all our competitors are the same. It’s not gone mainstream yet, but we’re very close,” he said.

McCarren cited instances where large corporates had been quoted millions of pounds by DNOs to improve or expand on connections, or suffer from blackouts that cause periods of downtime that last long after the outage has been rectified.

“Some large users have had power outages that might only last a minute, but they cause processes to shut down. If you’re a smelting factory you can’t just turn those [processes] back on. Every time it goes down for a minute it takes 90 minutes or so to reboot, and millions of pounds in production are lost. These kind of people are going to look to be more self-sufficient moving forward,” he said. 

Scotland’s ‘largest’ solar farm approved with more to follow from Elgin

Plans for the largest solar farm in Scotland have been approved, allowing Elgin Energy to construct what is expected to be a subsidy-free 20MW development on the north coast.

Moray Council yesterday confirmed if had granted permission for the solar farm at Speyslaw near Urquhart which, when constructed, would replace the 14MW solar farm in Errol, also built by Elgin Energy, as the largest in Scotland.

Councillors approved the development of the 47-hectare site, which could see around 80,000 solar panels installed. The land will continue to be used for grazing over the 30 year lifetime of the scheme, with a condition of planning permission requiring regular updates on the energy generated at the site.

Before works begin, the council will also approve the make and model of the solar panels to be used, as well as a draft decommissioning and restoration plan for the end of the scheme.

Cllr Claire Feaver, chair of Moray Council’s Planning & Regulatory Services Committee, said: “A significant amount of renewable energy will be generated by this solar farm over the next 30 years.

“The opportunity to continue grazing on the land, together with the Habitat Management Plan, will maintain and enhance the diverse range of species in and around the site. I see this as a win-win.”

Despite offering the largest confirmed solar site in Scotland, it is likely this will not remain the case for long as Elgin recently submitted plans for another subsidy free site near Speyslaw at Milltown Airfield, which would boast more than 50MW of capacity.

Elgin expects a decision from the Energy Consents Unit, a Scottish government body which considers electricity generating stations over 50MW, by Q1 2018 on the larger site but was unable to confirm when the site would be completed if successful.

A spokesperson added that large sites such as Speyslaw and Milltown Airfield will likely become the norm as the UK moves towards an unsubsidised market.

Gigawatts of subsidy-free solar farms being planned for UK market rebound

The UK solar industry is set to emerge as one of Europe’s leading post-subsidy large-scale solar markets from 2018 onwards, with plans being scoped, submitted and approved in the past 12 months alone that comfortably exceed the gigawatt-level of new site deployment.

Sites are typically being planned now in the 20-50MW range, with the largest site going through full planning submission today with a potential capacity, when built, above 100MW in size.

This article reviews some of the factors at play, discusses the drivers, and explains the business strategies being employed by the developers now set to reshape the next strong uptick in UK ground-mount solar farm builds.

More information and discussion will be provided in the forthcoming webinar, UK Multi-GW Solar Pipeline Revealed, on Wednesday 9 August. Details on how to register for the webinar can be found here. Other sources of market intelligence are outlined at the end of this blog.

The transition phase to un-subsidised solar farm deployment

Much of the global solar industry remains fixated on legacy solar markets that existed in a time when subsidies were widely available. Not without good cause, as this has shaped global PV deployment until now and will have a massive bearing on annual deployment levels over the next few years.

But long-term, solar has economic and environmental drivers that work in the absence of local subsidies, and the case for this will become more widespread and prevalent during the decade from 2020 onwards.

In looking at the 13GW of solar in the UK, clearly this only existed because incentives were in place and eager participants (developers, EPCs, component suppliers, planners and investors) drove the markets to levels that could only be obtained in a supply-driven climate.

That knowledge learned is essentially what puts the UK in a prime position to make the move from incentives to post-subsidy a relatively painless exercise.

Other mainland European countries that went through similar supply-driven PV deployment phases did so effectively too early in the day, with reference markers (components, capex, financing, energy market dynamics) simply not conducive to restarting in the absence of continued risk-free returns from respective governments or utilities. Spain for example had to endure almost a decade in the PV wilderness between its brief flirtations as global driver in 2008, to the recent gigawatt-levels of solar allocated by auction in 2017.

So, being late in the game for solar uptick in Europe has its benefits, and if in any way intended by policy makers, then immediate cabinet promotions should be duly rewarded!

Of course, with the solar industry hard enough to predict three months out, far less three or five years, it is just pure luck that the UK boom took place when incentives were a must, and finished when solar was on the brink of being viable without subsidies.

One after another, government ministers in the UK trumpeted verbiage along the lines of ‘solar has to stand on its own two feet’, and ‘subsidies are being cut back to help the industry become self-reliant’. No-one ever believed that the motives for reducing or removing subsidies were to help the industry, but to slow down uncontrollable deployment rates and the financial implications of these.

Putting all that aside, as few would have acted differently if placed in government offices again, we are now potentially in a place where government support for solar can be rationally considered, without the fear of having to subsidise and lose control, and this is a game-changer as momentum continues to build that future CfD rounds could be highly favourable to solar PV as a prioritised technology of choice. What a difference a few years can make.

UK planning legislation remains the definitive reference point

Over the past few years, there have been many claims from developers as starting large-scale solar farms, post-subsidy. However, as long as these plans remain absent from any planning process through LPAs, they are just plans and no more. Every solar farm needs full planning application approval as a bare minimum, as the planning portal remains the leading marker for any future deployment prospects.

In this respect, we can also see clearly the sites that are a spill-over from development that had been done for Contracts for Difference submission in the past, or sites that were either partially done under ROCs or simply never got to shovel-ready stage to generate financing under 1.3 or 1.2 ROCs.

Removing these, we have the ‘real’ pipeline sites that were put into planning during 2016 and 2017; well after planning deadlines for ROCs and with no visibility of any CfD rounds for solar. As such, it has to be inferred that subsidy-free operation of these is envisaged, or at a minimum using shifting to a different business model and revenue streams and carrying a different risk profile for investors.

Understanding the 3GW+ of pipeline sites

Currently, the post-subsidy pipeline of large-scale solar farms in the UK exceeds 3GW, across more than 300 sites. Applying the timeline-based filter (as discussed in the section above), we can segment the pipeline now to see how much of the 3GW is arising from specific post-subsidy activity.

The ROC portion of the pie-chart above is based on sites where planning approval was obtained, but the developers failed to move sites forward before the 1.2 ROC deadline on 31 March 2017, and a bunch where part of the sites were completed (typically 4.99MW under 1.2 ROCs) but where material amendments were approved by LPAs that ring-fenced potential expansion phases to access existing red-line planning approval.

A number of the sites falling under the RO/CfD list have also been acquired as primary SPV acquisitions and reworked through planning to allow the addition of energy storage systems, either intended for storage auction mechanisms or as site-specific subsidy free solar/storage construction during 2017/2018.

The most interesting segment of the pie-chart above however relates to the post-subsidy part. These are new sites that have emerged in 2016 and so far in 2017. Approximately 95 sites fall into this category, adding up to more than 1.3GW. Incredibly, more than 25% of these (on 560MW worth of new solar farms) are being planned to include energy storage units.

In terms of the size of projects within the full 3GW-plus of projects, most of the capacity falls into the 20-50MW site level – again confirmation of the intent to move these forward post-subsidy and applying economy-of-scale economics as a key driver for return-on-investment metrics.

Indeed, in the past few days, full planning documentation has been tracked by our in-house research team at Solar Media for the UK’s first 100MW solar farm. This potentially hints at just the type of planning activity that is necessary to fully support the transition to solar farms moving to subsidy-free and at very large scale. Given the developer in question and the site location, we expect this site to be approved in the next few months, raising the prospects of a 100MW solar farm being constructed in 2018. What a start to subsidy-free deployment this would represent for the UK solar industry.

Forecasting build-out probability in the analysis

As with every pipeline of planning or scoping, it is essential to apply cautious forecasting, in terms of the probability of completion. Clearly, if a site is simply at screening and waiting to see if an environmental impact assessment is needed, the chances of final build-out are at the 10-20% level, depending on the developer in question and whether the company is using as a tentative placeholder or as a serious attempt to submit a full application.

The history of the site also needs to be factored in; for example, was the site intended purely for ROCs and is too small to attract any real attention in the absence of subsidies? Is there activity at the SPV level that would suggest intent on new site owners to rework an existing approved application?

But probably the most useful reference point in the history of the site applications comes down to the current developer/owner, and the track-record in UK solar farms and seeing through shovel-ready sites either through in-house EPC work or packaged into shovel-ready site bundles and sold to global developers that have the financial backing to take on large solar farm developments and see them through to completion and ultimate third-party institutional ownership.

The figure below shows a capacity-based segmentation based on adding up site-specific build-out probability factors. The key part to view is in the >50% segments that capture the most viable sites for the 2017-2018 time period. Many of the other sites will end up terminated or not seen through for a host of reasons, as is normal with any pipeline of applications. But a bunch of sites here will move to the >50% bands in the next 12 months, in addition to new applications yet to be lodged. This is expected to keep the hot prospect listing an ongoing research exercise and tracking these for prospective component suppliers (modules, inverters, mounting) and EPCs will be essential reading over the next 12-18 months. This is particularly true for the main suppliers and EPCs that benefited from the 2013-2017 UK ground-mount market in the UK, and retain European operations ahead of the regional subsidy-free or auction-driven uptick from 2018 onwards.

Don’t discount the public sector

Interestingly, more than 10% of the 3GW pipeline is coming from the public sector. Here we are lumping for convenience local and borough councils and utilities (and in particular water utilities) as a grouping. Some of the plans at the council level are highly ambitious in seeking strong solar farm contributions to meet long-term sustainability and renewables aspirations, and some even include co-located solar and storage sites. This grouping has historically offered good business to local UK-owned EPCs and sub-contractors, and this trend appears to continue in the post-subsidy climate also.

Learning more about the sites and drivers for UK subsidy-free solar farms

Visibility today is critical for module/inverter/mounting suppliers, potential EPCs, and indeed asset owners hoping to have first refusal on shovel-ready status. When the market has moved forward in the next 12-24 months, those companies looking for the opportunities then may simply be arriving on the scene too late.

Solar Media is undertaking several fact-finding activities in the next few months to help in this respect.

Please register here for our free webinar, UK Multi-GW Solar Pipeline Revealed, on Wednesday 9 August.

The Solar & Storage Live event at the NEC in Birmingham, UK on 3-5 October will showcase subsidy-free UK solar at the Solar Business Conference on 4 October 2017. More information on registering to attend for the talks can be found here.

Finally, our in-house Market Research team is set to launch a new monthly report this month, listing all the projects that make up the 3GW of new post-deadline UK solar farms. To register to get email alerts on the release date and full content of the report, please note your interest through this link.

© Solar Media Limited