The Feed-in Tariffs for solar parks are being slashed. This means that few will be financially viable in the short term.
As part of the Comprehensive Spending Review, the budget for Feed-In Tariffs was reduced, and the government decided to focus the entire reduction on large scale solar.
Obviously we think this was misguided, especially as they have eliminated the most cost-effective end of the market, while making the most expensive applications more attractive.
The financial impact of the change
The original tariff levels were designed to deliver returns of 5 to 8% for project owners. Well designed solar parks, where much of the energy could be consumed locally, were able to deliver returns of 10-12%.
At the new tariff levels the best solar parks might make returns of 2-3%, and many will find it hard even over the 25-year tariff period to recover the initial investment.
Why would I want to even consider a solar park, then?
There are two possibilities:
- The solar park may be a means of making a larger development possible, for example by securing a planning consent that would otherwise be difficult; or providing or strengthening a non-existent or weak electricity supply.
- The tariff reductions may well be reversed in the future - the UK looks like falling short of its 2020 renewable energy target and will need to ramp up performance after the present spending cuts have been delivered. If government chops and changes its incentives, as in the past, the sites which already have planning consent will be best placed to benefit.
OK, what's the next step then?
Ownergy offers a step-by-step solar park assessment service, where the costs of the initial stages are very low.
We'd suggest you might want to think about getting an initial assessment, and if that looks promising consider the steps to getting planning consent, as described here.