All over Europe there are reports of a plunge in the prices of solar pv projects, and in the UK a leading solar analyst has predicted that over 1 GW of solar pv will be deployed in the UK in 2020.
Solar pv prices have been hurtling ever lower for many years. and some crazily low prices for solar pv projects have been reported in Middle East in contract auction contests such as in the UAE and Qatar. But this trend is now even affecting not-as-sunny parts of Europe. Solar pv costs - what finance geeks call 'levellised cost of energy' (LCOE) - and which indicate what projects investors and banks will support - are dipping below wholesale electricity prices in more and more countries.
That means that solar pv schemes, big ones that can be built efficiently using higher power outputs compared to rooftop solar projects, are now coming forward on what is called a 'subsidy free' basis in the UK. That is without Government based incentives such as feed in tariffs that launched the first markets for solar pv (before being scaled back in recent years).
Even in often rather cold Finland the cost of solar pv is now below that of the wholesale power price. In Germany, which still gives some feed-in tariff support for what is now a booming rooftop solar pv market (increasingly associated with home batteries) the Government is giving out contracts to large schemes through auctions which deliver low prices. Nearly 4 GW of solar pv was deployed in Germany in 2019.
The surprise is that in the UK, which no longer has a Government backed system of awarding contracts to solar pv schemes, increasing quantities of 'subsidy free' solar pv schemes are in the development pipeline. According to Finlay Colville, Head of Market Research at the Solar Power Portal, around 6.6 GW of solar pv capacity is currently at various stages in the pipeline, with over 1 GW said to be deployed in 2020. These projects are dominated by (what is for solar pv) very large projects, many being 40 MW or bigger in size. Of course this pipeline is, on this trend, likely to grow in the future. 6.6 GW of utility solar projects would generate around 2.4 per cent of UK electricity on its own on an annualised basis.
There have been so far, in the UK, a small number of 'subsidy free' solar projects that have been deployed in particularly favourable circumstances (eg alongside already available grid connection equipment, or as extensions of battery projects). However this new crop of what can be called 'utility scale' projects represents a new development that will make a substantial addition to UK generating capacity.
There are also various plans for 'subsidy free' onshore wind projects (including projects being taken ahead by Scottish Power and SSE). Around 500 MW of what will be 'subsidy free' wind projects are registered for the capacity mechanism for the 2022-23 year, but the capacity of solar pv projects threatens to move well ahead of wind power in the subsidy-free development stakes (note: for comparison a MW of wind power will generate roughly twice as much electricity per annum as a MW of solar on average). Although wind projects on the best sites offer very cheap prices, a big constraint on renewable energy projects is the availability of sufficiently low cost grid connection options. Solar pv may have an advantage here. Whilst high windspeed sites are tied to specific limited locations, there is an even spread of sun resources around the country. Hence solar pv may have more of a chance to pick up good grid connection possibilities.
Of course when it comes to offshore wind power, things are different.There are very, very large areas of good windspeed locations offshore, and grid connection costs for schemes can be calculated down simply by building ever more massive windfarms. But that's another story, albeit a very big one!
Reference links:
Solar Power Portal
https://www.solarpowerportal.co.uk/blogs/uk_utility_solar_sector_starts_gw_plus_deployment_roll_out_for_2020
also LCOE analysis at
https://onlinelibrary.wiley.com/doi/full/10.1002/pip.3189
The 1GW deployment in 2020 is just a projection and could prove to be wrong - after all a similar bullish estimate was made for 2019.
ReplyDeleteIt's interesting to compare to onshore wind - by my reckoning there are many hundreds of subsidy free onshore wind already committed and under construction.
As you quite rightly say, the challenge for onshore wind is it is very location specific and this doesn't always line up with the grid connections and this is especially key since most of England is in effect out of bounds to onshore wind. However, for a given grid connection cost, onshore wind is in a stronger position than solar given the much high capacity factors. I think we may ultimately see increased levels of hybrid projects utilising at least 2 out of solar, storage and wind to mitigate grid connection costs.
Finally it is not only about installed capacity, with onshore wind currently benefitting from much higher capacity factors than solar.
Yes, well, I'm certainly with you here...but the more the merrier as far as both technologies as far as I am concerned!
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