Local Authority Solar Farm Connected to Grid Under the CFD Regime
In a recent blog for Clean Energy News, Stephen Cirell considers the fact that one of only two solar farms connected to the electricity grid via the Contracts for Difference regime is a local authority project.
Solar Power Portal reported on 3 January 2017 that the second and last remaining solar farm to receive ‘contracts for difference’ funding under the initial auction has been connected to the grid (add reference).
The first was completed by Lightsource Renewable Energy Ltd a while ago. Lightsource is, of course, the largest solar PV developer in the UK. It may come as a surprise to some, therefore, that the only other project brought to completion was in fact a local authority scheme.
Cambridgeshire County Council is now the proud owner of the largest civic solar farm in the country. All of the others are 5 MW or below, having been completed under the Feed in Tariff regime or ROCs (under 5 MW category). The Triangle Solar Farm in Soham is of 10 MW capacity.
There are other factors that also stand out about the completion of this project. The fact that it was undertaken under the ‘contracts for difference’ regime is impressive. Many more experienced solar developers did not participate in the inaugural auction for CFDs, waiting to see how it panned out. Three bidders got it hopelessly wrong and their bids were cancelled shortly afterwards.
The second interesting fact is that the project has not gone smoothly but the Council has persevered and still brought it to completion. Whilst in the past, changes in financial incentives and other setbacks might persuade local authorities to give up, a new resilience in solar PV development is starting to show. This is why there is now a pipeline of projects across the country and are moving towards development. The fact that the CFD regime is no longer available for solar farm development of any sort amply demonstrates the volatility of Governmental policy in this area.
The project is underpinned by a thorough business case, which changed as it developed. Whilst this involved the financial return reducing, due to increased costs, the Council has calculated that the project will still deliver much needed revenue funds to be channelled into public services. It has always been the case that local government can borrow money cheaply and so does not need to sustain the sort of financial returns often required by private developers.
Once the asset is operational, other potential avenues open up, such as refinancing the project. It is also possible to retrofit battery storage technology and increase the return via electricity trading, a point I made recently in the report ‘Investing in Electricity: reducing costs and increasing income for local authorities (published by APSE Energy). In short, the return to the Council will increase as energy prices go up and depending on how canny it is about selling the power it generates.
This is a great example of where the public sector is demonstrating that it has an important role to play in this marketplace. Cambridgeshire County Council has joined a small list of local authorities that are leading the way in different aspects of the green agenda, such as Nottingham and Bristol City Councils (establishment of fully licensed ESCOs), Swindon Borough Council (crowd funding solar farms), Cornwall, Telford and Wrexham (first civic solar farms constructed) and Bristol City Council again (for the first civic wind farm in the UK).
The path beaten by these trail blazers is to be followed by many more authorities over the next few years. For me, the next frontier will be battery storage on a commercial level and participation in the Capacity Market or National Grid contracts for time shifting of electricity and supply of power at peak times. The examples above demonstrate that there is no area that a local authority cannot tackle, so it looks like 2017 is going to be an interesting year!
Stephen Cirell is an independent consultant on the green agenda specialising in local government and the public sector. He is author of A Guide to Solar PV Projects for Local Government and the Public Sector, the second edition of which was published in 2015.