Forget this Spin Too: Solar PV is not on the Brink of Being Subsidy Free
Hot on the heels of the uncritical media fuss around the recent Contracts for Difference awarded to offshore wind (for comment see “Forget the Spin: Offshore wind costs are not falling”) comes an equally misleading set of headlines falsely claiming that Solar Photovoltaic generation is on the brink of operating without market distortions and coercions. The truth, unsurprisingly, is quite otherwise.Claire Perry MP, Minister of State for Climate Change and Industry, will today cut the ribbon at the Clayhill Solar Farm, a project that the Department of Business, Energy and Industrial Strategy (BEIS) has welcomed with a striking press statement entitled “Subsidy Free Solar Comes to the UK”.Naturally enough this has generated a good deal of supportive press coverage, but, like the recent excitement about the low prices awarded to offshore wind, it sounds too good to be true and in fact turns out to be so.The truth is that while the Clayhill scheme does include 10 MW of solar panels, its economic heart is comprised of five BYD batteries, apparently with a peak output of 6 MW and a storage capacity of 6 MWh of electrical energy.These batteries will seek lucrative retaining contracts to provide system balancing services, probably under the Capacity Mechanism. Economically, Clayhill is not a “subsidy free” solar system, but a battery storage project providing rapid response power and using onsite solar as one of its charging options.Thus, contrary to the absurd PR coming out of BEIS, Clayhill is in no respect an indicator of incipient economic maturity in the solar sector, and underneath the silly headlines parroting BEIS’s nonsense even the site’s developers and the Solar Trade Association both give the lie to the exaggerations.Mr Shine, chairman of Anesco, which owns Clayhill, has very honestly admitted to The Times that solar farms are “still not economically viable” (“Clayhill, Britain’s first subsidy-free solar farm, revives fading industry”), and in the FT he is unequivocal:
“‘It [the Clayhill project] wouldn’t pay with solar by itself at the moment . . . it needs the storage as well,’ said Mr Shine.”
Elsewhere in the FT's story the Solar Trade Association (STA), alert to the possibility that the BEIS hype might put an end to any hopes of a renewal of subsidies to solar in the UK, is quoted as saying:
“We absolutely applaud them [Anesco] but government shouldn’t then assume the industry is away — it isn’t […] It is only going to be exceptional projects [that are built subsidy free].”
Indeed, the STA spokeswoman is further reported as observing with complete truth that “Government subsidies would still be required to support the majority of solar projects in future.” (“Solar power breakthrough as subsidy-free farm opens”).If these contradictions were not bad enough for departmental credibility, there is behind it all a still deeper irony: the Capacity Mechanism and its market for expensive grid balancing options such as batteries only exists to address the undesirable consequences of the government's cack-handed market distortions in favour of uncontrollable renewables such as solar and wind.