Subsidy-free stand-alone solar is coming, but it isn’t quite here yet
This post was updated: 18 July 2022
At the end of September the UK’s first subsidy-free solar farm was unveiled by Anesco on the Clayhill site in Bedfordshire. The Anesco scheme is ground-breaking and award winning. Having worked with their team on solar projects, we acknowledge their expertise and applaud this scheme which is a big step forward for the renewables industry.
However, even though this scheme was financially viable without any subsidies, we want landowners to be aware that it doesn’t mean that every large-scale stand-alone solar scheme will be viable in the short term.
Stand-alone is a solar scheme not deployed with a storage technology or behind-the-meter. While solar panel prices are reducing year-on-year by between 20-30% and the ‘balance of system costs’ are coming down almost as quickly (on a £/Watt basis), the success of the Anesco site isn’t down to these reductions alone. Among the many factors for the scheme’s success is a combination of two unusual factors:
- There was a pre-existing grid connection at the site, installed for an adjacent solar farm, with significant spare capacity. In the past, solar developers would have typically budgeted up to £100,000 per MW for a grid connection. The 10MW Clayhill site, therefore, benefitted from an efficiency saving in the order of £1 million compared to a subsidy-led scheme. A grid connection cost of £100,000 per MW would currently rule out most, if not all, subsidy-free sites.
- There was enough import and additional export capacity on that part of the electrical grid to enable a co-located battery storage scheme. Currently, a large-scale battery system co-located with solar must have its own level of independent import and export capacity to be financially viable. This enables the storage element of the scheme to access National Grid’s ancillary services and capacity markets, and therefore stack layers of additional revenues above and beyond solar time-shifting and energy price arbitrage. Having sufficient export capacity available for both a large solar farm and for a battery is very rare.
These grid-related circumstances, among other factors, combined to make the Clayhill scheme financially viable without subsidies. Until prices come down further, co-located solar and battery storage will only work where there are circumstances such as these.
Subsidy free, stand-alone solar will work soon. Hive Energy have announced they are planning to energise a subsidy free stand-alone solar scheme in summer 2018. It is a large, 40 MW site (around 180 acres) in Hampshire with good levels of solar irradiation, so it has potential. Time will tell if Hive do build when they say they will, but if they do, it may be the first stand-alone subsidy-free scheme.
What should landowners do now?
In the meantime, lots of developers are tying up ground for large stand-alone schemes, where the costs of the grid connection and the economies of scale might make it financially viable. This is under the expectation that market conditions will come right for stand-alone subsidy-free solar.
Now is the time for landowners to find out if they have the right ground and enough grid capacity for a stand-alone solar scheme. Or better still, if they also have sufficient import and export capacity for a solar scheme co-located with battery storage. Their available capacity needs to be secured ahead of their neighbours, and they must not commit to spending relatively large sums on grid application fees until they are sure that they have a chance of a viable scheme.
At Roadnight Taylor, we can rapidly find out if you have a genuine chance of a viable stand-alone or co-located scheme with our Stop/Go feasibility study.