The end of the UK’s Renewable Obligation Certificate (ROC) means solar developers will have to “actively” think about their future project revenues, including repowering their assets, speakers at the Clean Power 2030 Summit in London said today.
“It’s never too early to start engaging,” says Hugh Brennan, CEO of Hive Energy, developer of Cleve Hill, Britain’s first solar NSIP. As more larger solar projects come onto the UK grid under the Contracts for Difference (CfD) programme, the competitive landscape for renewables will change, he explained. The ROC closed to new generation capacity in 2017 and was replaced by the CfD.
As more CfD-backed projects come online and ROCs begin to be phased out in the coming years, Brennan said Britain “will be a more competitive market and solar prices will be lower.” This will change the challenges asset owners face as they enter a more trader-based – or fully trader – market.
“It’s no longer just a matter of sitting back and receiving your subsidy,” says Fraser Johnston, head of asset management at Germany-based developer Baywa Re.
Part of the broader transition for older ROC projects is repowering and renewing – replacing and updating a project as it nears the end of its current life.
Conor Hanley, Ireland investment leader at Octopus Energy Generation, said there are two main reasons why property owners tend to re-strengthen their assets: an “unacceptable technical risk” that causes a functional issue or health hazard, or to “increase the net asset value (NAV) of the project.”
He said Octopus Energy Generation has not yet reached the “tipping point” for NAV-based repowering, and Johnston said the same about Baywa re, but Hanley expects “that will happen.” [begin to] happens when the subsidy ends.”
The panellists agreed that there is no set formula for resourcing UK solar sites, as the reasons and details for each project vary considerably, in addition to different network and local regulatory situations. Specific landowner agreements also play a major role.
“Financial return is the first hurdle” in making a repowering decision, Johnston said, although technical and other situations quickly follow.
Brennan said that, from a technology perspective, asset owners will want to delay their decision to restore their power as long as possible. He said knowing their options as early as possible is critical, but “you want to put that final decision on hold” as new solar and energy storage technologies rapidly emerge.
From a policy perspective, he said state and local government “must find ways to support people in making decisions to help the grid.” This could mean simply re-powering a PV installation with new technology, expanding its footprint, adding energy storage capacity, or whatever technology or format conversion is best suited to local grid conditions.
Following this, Solclaris managing director Joe Miletic said asset owners and governments should avoid the ‘waste’ of decommissioning facilities and instead focus on different methods of repowering or renewing their energy. “It’s a shame,” he said, especially when an existing project has the electrical infrastructure and development potential.
