At the tail end of last year, just as the solar PV industry was reeling from the announcement of controversial proposed cuts in FIT tariffs, we hosted some seminars with a local law firm highlighting what a bright future the industry had in the South West.

That bright future has been underlined by a publication today from the Department of Energy and Climate Change (DECC) on cost falls in the solar industry. One of the issues highlighted in the seminar was that the evidenced – based policy making process that DECC had followed had been too slow and cumbersome to capture up-to-date economics in such a rapidly changing industry - and as result DECC’s PV tariffs had been misjudged causing all manner of difficulties for them, the industry and our clients.

They have learned their lesson – ahead of tomorrow’s expected FIT announcements they have commissioned new research, begun and completed in January this year, so as to have up to date information and the  report is worth a read.

The current and anticipated future prices of solar PV installations were unthinkable until recently; for instance the marginal capital costs put as the range for ground-mounted installations of £1,000/kw to £2,000/kw is already below the costs DECC had expected to see (per their ROC banding consultation) in 2020 after almost a decade of cost falls. Not only have those low costs been achieved a decade early but further material falls are expected during the course of this year, and thereafter.

This, subject to the imminent FIT review, should lead to two clear groups of winners in the South West:

1. Farmers and other land owners – prices are now at a level where field – based systems are economically competitive in energy terms with offshore wind installations in our view. That means that some of the (very substantial) subsidies earmarked for offshore wind through the Renewable Obligation Certificate (ROC) regime can be diverted to solar installations in the South West, opening up significant opportunity for landowners. This opportunity is also not bound by some of the other aspects of the FIT regime such as the c.35 acre / 5MW size cap. For instance there are already reports of plans for a 30MW/150 acre development in Loughborough seeking consent for development later this year;

Businesses with suitable, unshaded roofs and matching electricity demand. The economics of PV installations are improved if use is made on site of the generated electricity. With capital costs much lower, even if tariffs are cut by a commensurate amount, the opportunity for businesses improves: less capital commitment from the business is required to self-supply a given proportion of its future electricity needs.