UK Government’s Solar Energy Targets in Jeopardy Due to Economic and Grid Connection Issues
London, UK – The UK Government’s ambitious goal to increase solar energy production by five times to 70GW by 2035 is facing major obstacles. According to a new study by energy consultant and former Head of Global Economics for BG Group, Huw Evans, a “perfect storm” of economic factors, supply chain disruptions, escalating interest rates, and delays in grid connections is putting the future of solar farms at risk.
The report, released on Wednesday 3 January, 2024, raises serious concerns about the viability of solar energy in the UK. Evans suggests that, under current economic conditions and ongoing difficulties in obtaining grid connections, the chances of solar farms being profitable in the near future are slim.
The UK Government has heavily promoted solar energy as a key solution to achieving its target of becoming carbon neutral by 2035. However, the study by Huw Evans casts doubt on the feasibility of this plan.
In his report, Evans highlights the increasing costs of developing solar farms, which have been underestimated by the UK Government. Despite offering higher prices through their Contract for Difference (CfD) allocation round to incentivize renewable energy, solar developers are still struggling to see a return on their investment. This is compounded by delays in connecting to the National Grid, which have been vastly underestimated by the Government.
The report also points to data from the International Renewable Energy Agency (IRENA) showing that the UK’s climate is among the least favorable for solar energy production. Compared to other countries such as Spain, Australia, and parts of the US, the UK’s annual solar electricity generation is only expected to reach 10%-11% of its capacity.
The issue of grid connection is also a major concern, with over 1,300 projects currently awaiting connection to the grid. This amounts to a staggering 400 GW of grid access requirements. Companies have been told they may have to wait up to 15 years before being able to sell the electricity they produce.
The National Grid has recently implemented new rules to alleviate this backlog, but they may have unintended consequences. The rules essentially push companies to either “get on, get back, or get out of the energy queue.” This has the potential to create numerous abandoned projects, with diggers tearing up the landscape and then being suspended as projects are put on hold due to grid connection delays.
One example of this is in Torquay, Devon, where diggers have already cleared a site, only to be told that grid connection will not be available for at least 5 years, with indications that it could be pushed back to the mid-2030s.
Another issue is the need for substation upgrades, with approximately 80% of the 300 substations across England and Wales requiring updates. According to Centrica, it takes years to install the necessary equipment, and the process could take up to eight years for each substation.
To move forward, projects will need to secure a CfD allocation in the auction rounds, with a deadline for coming online. However, this deadline may not align with the date provided by the National Grid for grid connection, making it difficult for investors and financiers to see a viable return on their investment.
The current situation is made even more challenging by the lack of coordination between the organizations responsible for setting these deadlines. Distribution Network Operators (DNOs) blame the National Grid for delays, while the National Grid blames Ofgem, and Ofgem blames the National Grid. This lack of accountability and investment in grid infrastructure is a major hurdle for the development of solar energy in the UK.
Peter Aston, a specialist connections engineer at the consultancy Roadnight Taylor, notes that some transmission projects can take up to 12 years to complete, which is a cause for concern considering the 2035 target is just 12 years away.
The findings of this report are cause for serious concern for the UK Government’s solar energy targets. With economic and grid connection issues hindering the development of solar farms, achieving the target of 70GW by 2035 seems unlikely. It is clear that urgent action is needed to address these challenges and ensure the future of solar energy in the UK.
For more information, please contact:
Huw Evans
Energy Consultant and Former Head of Global Economics for BG Group
Tel: 07917 412313
Email: swallett.farm@gmail.com
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.