In a highly charged year for the clean energy sector the Whitehouse Consultancy, in partnership with Solar Media – publishers of Clean Energy News, Energy Storage News and Solar Power Portal – hosted a policy roundtable to discuss ambitions for the energy sector in 2018.
Joining the Whitehouse team alongside moderator David Pratt of Clean Energy News were Ross McKenzie, EU Public Affairs Manager for Drax; Steve Mack, Director of Investment at Low Carbon; Bruce Davis Founder and Chief Executive of Abundance Investment; and Andrew Crossland, Energy Storage Specialist at Solar Century and founder of MyGridGB.
Reflecting on 2017, much of the discussion focused on storage and the benefits it provided for the UK’s electricity system over the last year, including support that enabled the first 24-hour period without coal generation since the Industrial Revolution.
However, the panel expressed concerns over funding models for future storage, with Andrew Crossland highlighting the need for longer term contracts from National Grid. This, the panellists agreed, would provide security to the market and to investors who, as Steve Mack noted, rely on certainty. Since the discussion, National Grid has published its Product Roadmap for Frequency Response and Reserve services; also stating its intention to rationalise its suite of products including FFR, STOR and Fast Response to create greater certainty for developers and investors. However, a final suite of new products isn’t expected until at least the middle of this year.
Going subsidy free
Reflecting on the solar market over recent years and particularly 2017, a consensus emerged that the move away from subsidy markets could be a positive thing. Bruce Davis highlighted that “the problem with subsidy markets is that you are then beholden to political whim and if the political whim is changing in a shorter than five-year time frame, then it’s less useful from an investor perspective.”
This view was reiterated by Steve Mack, Head of Investments at Low Carbon, who predicted that investment over 2018 will most likely go to “things that are less reliant on policy.” The Mack and Davis believe that it is purchase power agreements that have the potential to lead subsidy free development of solar as there currently aren’t contracts long term enough to justify investment.
In the FiT market, drastically reduced rates have left smaller installations without an economic incentive significantly diminishing the UK’s solar market.
Speaking about the solar market Andrew Crossland warned that “I think within the next six months we’re going to need some clarity on what’s going to happen in terms of long term security of finance because in essence, export solar [that] you don’t consume on site will need some guaranteed revenue and I don’t see any answer to that at the moment.”
The consistent point from the panel was that increased investment into renewables requires increased assurance in terms of revenue. As a result of flip-flop Government policy that is evident in solar, investors now look to subsidy free revenue streams that are relatively unimpacted by policy decisions.
Davis warned however, “we looked at the subsidy-free solar option and it looks very early stage and we can’t see what the business model is on the other side with any certainty.” If Government wants to boost the development of renewables, it needs to support the development of long-term concrete revenue streams.