Solar PV: pathway to zero subsidysolar-media.s3.amazonaws.com/assets/presentations... · Trina,Yingli,Bosch,Kingspan . 18 Solar Strategy Legacy 2014/15 2015/16 2016/17 2017/18 2018/19

Solar PV: pathway to zero subsidy

Paul Barwell Chief Executive Officer, STA

Trina,Yingli,Bosch,Kingspan

Path to Zero Subsidy Stable Policy for subsidy free solar

16th October 2014

Paul Barwell STA CEO

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• Messages from Europe – (renewables) will need to stand on own two feet

• State aid approval more challenging • Political uncertainty and upheaval • Political pressure on consumer bills • The budgets are ‘bust’ • Full FIT’s review in 2015

Solution: STA ‘Solar Independence Plan’ Independence from subsidy Independence from political uncertainty Independence from volatile market prices

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• Rug pulled on Large Scale solar, CfD’s will not (yet) fill the gap • Remove non financial barriers = higher deployment = breaching LCF • The FIT’s budget is ‘bust’ = £550m legacy costs • Door is firmly closed to additional FIT budget allocation (DECC)

– “We can not make changes to committed spend under the FIT” – “There is no extra money available. Difficult decisions on prioritisation

need to be made”

• FIT’s 3 year review due 2nd half 2015 – To reassess tariffs to ensure not overcompensating – State Aid guidelines 5-8% IRR – Other ideas for improving system: degression triggers, level of

degression, new/merging bands – VfM for existing and new technologies

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• Model entire solar budget (FiT, RO, CfD) out to 2020/2021

• Useful for many reasons: – Fully costed plan to zero subsidy – Scenario analysis – Helping shape decisions on FiT review (e.g. this change will

save/cost LCF £x million) – Defend need for State Aid intervention

• Three different growth scenarios:

– Solar Strategy: 11GW by 2020 – Ministerial Ambition: 20GW by 2020 – Bold Scenario: 25GW by 2020


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Deployment Scenarios (MW)

Solar Strategy "20GW" Bold

Scenario

FIT's 6,888 10,228 12,087RO ground 3,400 4,350 4,850RO rooftop 370 870 1,120CfD's 350 4,850 7,100Total 11,008 20,298 25,157


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Solar Strategy Legacy 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 CumulativeFIT's 2,006 587 601 649 699 739 781 827 6,888 RO ground 2,100 1,000 100 200 3,400 RO rooftop 20 50 100 200 370 CfD's 0 0 50 100 100 100 350 Total 4,126 1,637 801 1,049 749 839 881 927 11,008

"20GW" Scenario Legacy 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 CumulativeFIT's 2,006 642 832 1,082 1,264 1,343 1,454 1,604 10,228 RO ground 2,100 1,750 150 350 4,350 RO rooftop 20 100 250 500 870 CfD's 50 300 750 1,000 1,250 1,500 4,850 Total 4,126 2,492 1,282 2,232 2,014 2,343 2,704 3,104 20,298

"Bold" Scenario Legacy 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 CumulativeFIT's 2,006 632 871 1,284 1,566 1,724 1,903 2,101 12,087 RO ground 2,100 2,000 250 500 4,850 RO rooftop 20 100 250 750 1,120 CfD's 100 500 1,000 1,500 2,000 2,000 7,100 Total 4,126 2,732 1,471 3,034 2,566 3,224 3,903 4,101 25,157

Projected Deployment out to 2020 under different scenarios - MW


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• FIT’s ‘SAVES’ £10m plus extra 3.3GW rooftop solar WITH policy changes • 11GW to 20GW is £149m more • 20GW to 25GW is a further £131m.

Still less than 20% of LCF budget in 2020 with 25GW (including all legacy costs!) (Note DECC 11GW is STA;’s interpretation only)

No changesCost to the LCF DECC "11GW" STA "20GW" STA "25GW"FiT (Legacy) £555m £555m £555mFiT £376m £366m £416mRO £233m £312m £352mCfD £6m £85m £127mTotal £1,169m £1,318m £1,449m

Total generation (GWh) 12,057 20,357 24,775Annual household cost £10.10 £11.39 £12.52% of LCF budget 14.3% 16.1% 17.7%

---- With policy changes---

Trina,Yingli,Bosch,Kingspan 10


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0-10kW >10-50kW > 50kW 163 57 1461 13 2550 9 4167 18 3189 22 2798 32 6083 19 42

100 50 50

1Q 20142Q 2014

Degression point 1 (3.5%)

PeriodMay - Jul 2012Aug - Oct 2012Nov - Jan 2013

3Q 20134Q 2013

With NO growth, 4kWp band tariff = 10.81p 2020/21 Similarly 50kWp band = 9.12p


Target => Zero tariffs across all rooftop by 2020/21 – But current 10-12GW solar strategy > 9p – Conversely, hyper degression risks on commercial rooftop = zero

too soon Need growth => zero subsidy, + zero cost to FIT’s LCF Our proposal Split the 250kW+ tariff band into 250kW-1MW and 1MW-5MW 3 degression bands become 5 (add 250kW and stand-alone) Increase the 250kW – 1MW band from 6.38p to ~ 8.00p Amend band limits:

• Reduce 100MW/q 0-10kW to 70MW • Reduce 50MW/q 10-50kW to 40MW • Increase 50MW/q 50kW+ to 120MW

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Old New Degression100 70 3.5%200 125 7%250 175 14%300 225 28%50 40 3.5%

100 75 7%150 125 14%200 175 28%

60 3.5%120 7%180 14%225 28%

50 40 3.5%100 80 7%150 120 14%200 150 28%

20 3.5%40 7%60 14%80 28%

Stand-alone

0-10kW

10-50kW

50-250kW

250-5MW


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Tariff band Existing Proposed 0-4kW 14.38 14.38 4-10kW 13.03 13.03 10-50kW 12.13 12.13 50-100kW 10.34 10.34 100-150kW 10.34 10.34 150-250kW 9.89 9.89 250kW-1MW 6.38 8.00 1MW-5MW 6.38 6.38 Stand-alone 6.38 6.38


• With STA’s proposed changes, the industry could deliver an additional 3.3GW of solar through FiTs with £10m less

• Additionally, under all scenarios the cost to the LCF is reduced by implementing the proposed changes.

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FiT Costs (excluding legacy) Deployment (GW) No Changes Proposed Changes DifferenceSolar Strategy 6.9 £376m £326m -£50mMinisterial Ambition 10.2 £503m £366m -£137mBold Scenario 12.1 £525m £416m -£109m


Solar Strategy - No changes 2q14 2q15 2q16 2q17 2q18 2q19 2q20

0-4kW14.38 13.88 13.39 12.47 12.03 10.44 9.05

4-10kW 13.03 12.57 12.13 11.30 10.90 9.46 8.2010-50kW 12.13 11.71 11.30 10.52 10.15 9.46 8.2050-100kW 10.71 9.98 9.63 9.29 8.06 6.99 6.06100-150kW 10.71 9.98 9.63 9.29 8.06 6.99 6.06150-250kW 10.25 9.54 9.21 8.89 7.71 6.68 5.80250kW-1MW 6.61 6.16 5.94 5.73 4.97 4.31 3.741MW-5MW 6.61 6.16 5.94 5.73 4.97 4.31 3.74Stand-alone 6.61 6.16 5.94 5.73 4.97 4.31 3.74

Ministerial Ambition - Proposed Changes 2q14 2q15 2q16 2q17 2q18 2q19 2q20

0-4kW 14.38 13.39 11.19 8.37 5.36 2.93 1.604-10kW 13.03 12.13 10.14 7.59 4.85 2.65 1.4510-50kW 12.13 11.71 10.14 7.59 4.85 2.65 1.4550-100kW 10.71 9.98 9.63 7.59 4.85 2.65 1.45100-150kW 10.71 9.98 9.63 7.59 4.85 2.65 1.45150-250kW 10.25 9.54 9.21 7.59 4.85 2.65 1.45250kW-1MW 6.61 6.16 5.94 5.73 4.85 2.65 1.451MW-5MW 6.61 6.16 5.94 5.73 4.85 2.65 1.45Stand-alone 6.61 5.94 5.53 5.15 4.85 2.65 1.45

• Our plan gives zero subsidy by 2020; solar strategy doesn’t.

11GW total 6.9GW FiTs

20GW Total 10.2GW FiTs


Even 25GW scenario will ONLY have zero subsidy with band changes

25GW - No changes 2q14 2q15 2q16 2q17 2q18 2q19 2q200-4kW 14.38 13.88 12.47 10.81 9.38 7.84 5.864-10kW 13.03 12.57 11.30 9.80 8.50 7.10 5.3110-50kW 12.13 11.71 11.30 9.80 8.50 7.10 5.3150-100kW 10.71 9.98 9.29 8.06 6.03 4.51 3.37100-150kW 10.71 9.98 9.29 8.06 6.03 4.51 3.37150-250kW 10.25 9.54 8.89 7.71 5.77 4.31 3.23250kW-1MW 6.61 6.16 5.73 4.97 3.72 2.78 2.081MW-5MW 6.61 6.16 5.73 4.97 3.72 2.78 2.08Stand-alone 6.61 6.16 5.73 4.97 3.72 2.78 2.08

25GW - Band changes 2q14 2q15 2q16 2q17 2q18 2q19 2q200-4kW 14.38 13.39 11.61 8.69 5.14 2.81 1.544-10kW 13.03 12.13 10.52 7.87 4.66 2.55 1.3910-50kW 12.13 11.71 10.52 7.87 4.66 2.55 1.3950-100kW 10.71 9.98 9.63 7.87 4.66 2.55 1.39100-150kW 10.71 9.98 9.63 7.87 4.66 2.55 1.39150-250kW 10.25 9.54 9.21 7.87 4.66 2.55 1.39250kW-1MW 6.61 6.16 5.94 5.73 4.66 2.55 1.391MW-5MW 6.61 6.16 5.94 5.73 4.66 2.55 1.39Stand-alone 6.61 5.94 5.53 5.15 4.66 2.55 1.39


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Solar Strategy Legacy 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Cumulative Total0-10kW 1389 338 356 374 393 413 434 456 4151

10-50kW 287 77 81 86 90 94 99 104 92050-250kW 71 86 111 132 145 160 177 195 1079

250kW-5MW 76 8 14 35 48 48 48 48 324Stand-alone 183 77 38 23 23 23 23 23 415

Total 6,888

STA "20GW" Legacy 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Cumulative Total0-10kW 1389 371 496 623 712 739 786 868 5985

10-50kW 287 82 106 141 167 184 203 225 139550-250kW 71 93 136 176 202 223 246 271 1418

250kW-5MW 76 9 25 82 125 138 152 168 774Stand-alone 183 88 69 60 58 60 66 73 656

Total 10,228

STA "25GW" Legacy 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Cumulative Total0-10kW 1389 358 462 617 729 805 889 981 6230

10-50kW 287 82 106 141 167 184 203 225 139550-250kW 71 96 205 355 433 478 528 583 2750

250kW-5MW 76 9 28 111 178 197 217 240 1055Stand-alone 183 88 69 60 58 60 66 73 656

Total 12,087

Projected Deployment out to 2020 under different scenarios (FiT deployment)


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4kWp 2014 2020 2030

Panel size 250kWp 330kWp 400kWp

No Panels 16 12 10

Cost of Equipment £ 3,250 £ 2,025 £ 1,710

Other costs £ 3,250 £ 2,475 £ 2,315

Total £ 6,500 £ 4,500 £ 4,025


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• 20GW ……. Extra 6GW RO/CfD is £158m more • 25GW ……. Extra 3GW RO/CfD only costs additional £82m

No changesCost to the LCF DECC "11GW" STA "20GW" STA "25GW"FiT (Legacy) £555m £555m £555mFiT £376m £366m £416mRO £233m £312m £352mCfD £6m £85m £127mTotal £1,169m £1,318m £1,449m

Total generation (GWh) 12,057 20,357 24,775Annual household cost £10.10 £11.39 £12.52% of LCF budget 14.3% 16.1% 17.7%

---- With policy changes---


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£000's per MWp 2014 2020 2030

Capex £1,028k £724k £646k

Opex (over full 25 years) £640k £526k £469k Total (project lifetime) £1,668k £1,249k £1,115k

Strike Price (in 2014) 132 87 <70

Wholesale Electricty (2014) 54 65 75



For an Extra £149m in 2020: Fully costed and budgeted plan Deliver 20GW solar 20 TWh renewable electricity ONLY £11.50 on consumer bills Zero tariffs by 2020 No further burden to LCF beyond 2020 No further need for state aid intervention A cost effective VfM investment on behalf of the UK consumer

A rich prize for the next Government! Demonstrates that Investment in renewables works …….


Thank you

16th October 2014

Paul Barwell STA CEO

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Documents

Solar PV: pathway to zero subsidysolar-media.s3.amazonaws.com/assets/presentations... · Trina,Yingli,Bosch,Kingspan . 18 Solar Strategy Legacy 2014/15 2015/16 2016/17 2017/18 2018/19