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Revealing the true UK large-scale solar farm pipeline for 2019

The in-house research team at Solar Media remains the only market research organisation to be tracking the UK solar market in detail, using a bottom-up audit trail of fully-qualified projects.

During 2018, we stepped out our level of detailed coverage on the post-subsidy UK solar market, and have seen daily adjustments to the project pipeline over the past few months. In fact, just today, there was another new 30-40MW large-scale project captured in the database, well ahead of the planning application being submitted to the relevant local authority.

This article provides the top-line takeaways from our projects database, and places some caution on pipeline phasing and likelihood of build out in the near term: factors that appear lacking in other project pipelines that are too often unqualified and lack qualified timings at the individual project level.

Revealing the current UK post-subsidy pipeline stats

Nobody else is tracking this level of detail. In fact, anyone hitherto accustomed to downloading any ‘free-for-view’ government originated renewables database listings will also be in for a surprise, as these never list the critical post-application build-up prior to full planning application, nor do they uncover fully audit trails on the key stakeholders or build phasing of any projects that end up in the planning portal.

Here are the main facts to know about the UK large-scale ground-mount post-subsidy UK solar pipeline at the start of 2019:

  • The pipeline consists of 197 projects with a combined capacity of 3.343GW
  • Of these, 72 are at the pre-application stage, totalling 1.858GW
  • This leaves a total of 125 projects (1.485GW) that are in the planning portal system as full planning applications or amended/phased versions of earlier submissions
  • Of these 125 projects, 17 (86MW) are pending approval, 12 (197MW) are left over from RO/NIROC activity and will likely be mothballed by us, unless there is any planning movement in the next six months
  • Out of the 125 projects, we have identified the ones that should be considered the top priority for post-subsidy activity. 55 projects (a total of 573MW) are approved/planning-active, which means they are ‘live’. Many are going through conditional approvals or further non-material amendments, or have started site preparation. Therefore, if anyone is citing the real pipeline, perhaps we should be using this number: 573MW.

Actually, when we look across all 197 projects, we end up with a pool of 41 projects (629MW) that we regard 2019-viable. So, if anything, we are getting closer to rounding the active-pipeline to 600MW – and not the multi-GW numbers few believe anyway.

Then we have an upside for 2019: the 45 projects approved that could move forward to construction in 2019 (total 318MW) but as yet, there are no major movements.

Now, let’s look at the project size bands. Five projects are above 50MW in the whole pipeline (683MW), 10 come in at the 49.99MW point, 20 fall in the 30-49MW band (746MW), and 60 in the 10-30MW (1.144GW). The others are in the 250kW to 10MW range, but this is obviously less of a focus in the absence of subsidies.

During the past two months alone, we have added 25 new projects (total of 447MW) to the database, reflecting the strong uptick in project screening that we have seen recently.

Accessing the full list of projects

The above breakdown of stats is what people really need to know when anyone states a project pipeline number that is unqualified. Almost always in the solar industry, unqualified pipelines come from observers not fully cognisant of the local market in question and not possessing any active bottom-up database or projects.

Anyone wishing to access the full list of 197 post-subside large-scale solar farms in the UK today can subscribe to our own UK Large-Scale Solar Farms: The Post-Subsidy Prospect List, by clicking on the hyperlink here. This report is updated daily by our in-house research team and released to subscribers at the end of each month.

2019 is certain to be a year of change for the UK solar industry. For those seeking to benefit (component supply, sub-contracting, pre-build acquisition rights), the key is knowing which projects to focus on and who the key companies are to approach for new business development.

Finlay Colville is among the speakers at next week’s Solar Finance & Investment conference in London, where post-subsidy development and the UK’s solar pipeline will be discussed. Tickets are still available and can be purchased here.

UK post-subsidy pipeline reaches 3GW, 500MW pegged for 2019 development

The in-house market-research team at Solar Media has just undertaken its most comprehensive project discovery phase yet, in the past few weeks, revealing that 175 different sites can now be classified as active leads for companies engaged in the build-out of large-scale ground-mount solar farms in the UK.

The total capacity from these 175 sites adds up to 2.974GW, and covers ground-mount sites from 250kW (lower-bound threshold on large-scale definition) to >300MW. The full list is now available on the new release of the UK Large-Scale Solar Farms – The Post-Subsidy Prospect List report, details on which can be found here.

New methodology

As FiTs, ROCs and CfD become incentive schemes of the past for large-scale solar farms in the UK, we have had to redo our research methodology in order to uncover what is the real pipeline of projects. This involves far greater levels of planning portal scrutiny, in addition to feeds from our network of industry contacts from planners to developers and site owners.

In fact, during the past month, we have done in-depth analyses across more than 300 planning portals, in addition to re-evaluating possible extended lifetime or additional-phase build out of legacy projects that missed ROC and CfD qualification, but are seeing material amendments or conditional discharge for potential 2019 ground-breaking.

Also, there is much more focus on the mid-term pipeline, characterised by unearthing all the screening and scoping opinions being sought by early-stage developers. This crucial part of the build-out cycle is generally the first firm reference point for projects 2-3 years out. Importantly, we only include projects where screening/scoping submissions have been lodged within the past 12 months, with only a very few exceptions to this rule. Also, if an EIA report is adjudged to be needed, we remove the site; again, there are a few exceptions here where very large sites can often not avoid this part of the pre-planning protocol.

The net result is the identification of 175 sites, and our continued optimism that 500MW (possibly even being on the low-side) of large-scale solar farms will be constructed in the UK during 2019.

Updated pipeline analysis

The first thing to do in estimating the pipeline is to divide into short-term (12-18 months to completion) and mid-term (18 months to 3 years). The easiest way to do this is simply to remove the screening/scoping entries.

This moves 58 sites (1.536GW) to the mid-term portion (with a probability of these held to 20% in the absence of full application submission). Incredibly, almost half of these screening sites are coming from one developer company, and contributing about 35% of the 1.54GW here. Equally notable is that this developer would appear to have not followed up on any of these sites with a full planning application, although the concept of stacking screening options (in this case almost exclusively assigned as not requiring an EIA) over multiple sites is not uncommon.

The remainder of the pipeline (117 sites adding to 1.44GW) is therefore what makes up the short-term pipeline part. Most of these have planning approval (100 sites across 1.37GW). Almost 30 sites (adding to about 450MW) are also known to be going through site-specific planning amendments and conditional discharge within the past six months. This is by far the clearest indication of the 500MW forecast we are holding to for large-scale solar in the UK during 2019.

Of course, not all the 30 sites (450MW) here will be built in 2019, but we still have a further 70 sites (more than 900MW) that we are tracking, some of which will be built during 2019.

The attention therefore is on this subset of 30 sites (450MW) as the list that every component supplier (modules, inverters, mounting), EPC/sub-contractor and asset-owner/manager needs to have visibility on right now.

Eleven of these sites are greater than 20MW in size. Fourteen fall into the 5-20MW range.

Sewage, waste and water: UK solar’s best friends in 2019

When the final report is written on UK solar for 2018, top of the list of company-types that have kept the business sector moving forward will be the water utilities. What started off with legacy roll-outs from United Utilities can now be seen across a range of different water companies across the whole of the country.

Including in this category are landfill sites, quarries, mines and collieries across about a dozen site owners. More than 40 sites (160MW) fall into the pipeline analysis here for 2019 construction, with project additions going into planning almost on a weekly basis.

In fact, there are a great deal more sites of smaller size (50-250kW) that we are excluding from large-scale status, purely as a consequence of setting the threshold for our research analysis at 250kW per site.

However, the MW stack comes firmly from the >250kW sites. Sixteen sites are in the 1-5MW range, 15 are 500kW to 1MW, but four of the sites are greater than 5MW.

The breaking news here is a new site from one of the water utilities that will be by far the largest site to be built by this grouping in the UK so far, at 12.2MW, and is expected to begin construction in early 2019.

From a planning consultant stand-point, this business has been welcome news, and here the market-leader by some margin has been Savills. The firm has effectively hand-held many of the utilities through the planning process with its legacy track-record in FiT/ROC project developer activities being key to this of recent.

In addition, this segment has created great opportunities for a sub-set of EPCs (UK owned and small-site specific) whose business prospects probably look more healthy today than they did during the ROC days when EPCs and sub-contractors from mainland Europe were so active in UK large-scale construction.

In fact, any delays to some of the large projects in the commercial sector (in particular the >20MW sites being forecast for build out in the next 12 months) could elevate the water/utility companies as the main group for UK ground-mount solar in 2019. Either way, their contributions simply cannot be ignored; anyone looking for a feel-good story in UK solar need search no further.

UK subsidy-free solar to commence in 2019

After some two years in the wilderness, the UK market will see the start of subsidy-free (or post-subsidy) large-scale solar farm deployment in 2019.

This article explains what to expect, why this is happening, and looks at the scale of the opportunity on offer to EPCs, component suppliers (modules, inverters, mounting) and ancillary sub-contracting services that support new site construction.

The full list of all large-scale (>250kW) ground-mount solar sites in the UK, currently classified in our pipeline, can be found in the latest release of the UK Large-Scale Solar Farms – The Post-Subsidy Prospect List report, details of which can be found here.

But what about the two subsidy-free projects already built?

Before I start on the full analysis and discussion, let’s get one thing straight. There have been no legitimate subsidy-free solar farms built yet in the UK.

But I hear you say: what about Anesco’s Clay Hill Farm in 2017, or the West Sussex Council’s Westhampnett project? Were these not the first two post-subsidy UK solar farms?

Not really. Anesco’s site was a hastily constructed follow-on phase of a legacy ROC-build site that had planning and grid-connection costs written off, and was (likely) using components from component-supplier partners from China (BYD, Huawei) that may have been more sweetheart-deal motivated than commercially driven. Everyone wanted to show a success in a post-ROC era, and the press (and government) obliged in propagating the myth that the UK could exist overnight in the absence of subsidies. In reality, Clay Hill was a distraction: not a help for the UK solar industry.

And forgive me also for some cynicism, but seriously – are we really to believe that a local council (not entities known for their supreme fiscal prudence) is going to be front-runner in UK large-scale post-subsidy build-outs! The Westhampnett site had been in the planning for several years, and was fundamentally an exercise in sustainability-target driven marketing euphoria.

In isolation, neither of the above sites would likely have passed any due-diligence analysis by an external investor, and should not be considered for inclusion in a discussion of how the UK has reacted to the removal of FiTs, ROCs and CfD incentive mechanisms for solar sites in recent years.

So, what has been happening?

Later in the article, I will outline data to show the boom-and-bust cycle of UK solar that existed between 2011 and 2018. For now however, let’s look at the action behind the scenes that has paved the way for the start of the real post-subsidy activity in 2019.

Once the ROCs (GB-specific ones) expired on 31 March 2017, there was the expected stoicism on the part of developers, mostly coming from players that had nowhere else to go. Much of this was false hope and the vast majority left the sector. Others had been making moves to get involved in overseas markets (southern Europe, MEA/LATAM and Australia) so this simply become the main focus to any new solar capacity additions.

Non-UK EPCs did what they normally do when subsidy-markets come to an end; they leave. This also applied to the raft of mainland Europe developers that had arrived in the UK in 2011 and made hay under the RO period.

However, the fact that we have a 2019 pipeline of build-outs can largely be credited to one of the existing major solar asset owners in the UK. Many other city investors talked-the-talk about driving UK subsidy-free solar, but when it came to action, only one got its hands dirty in the painstaking process of scanning every site on offer from former planning activity, while also moving upstream in the value-chain of a solar farm and being a driver of planning development (aligned with experience planners that had been engaged with one of the main developers of the subsidy era).

Two other project developers kept in the loop also. One (based in the north of England) returned to a desktop screening frenzy, but with no indication of any full planning application anywhere to be seen. The second company in question set about a radically more professional approach and has a pipeline of projects that no other company can lay claim to today in the UK.

Somewhat on the periphery we have the Cleve Hill and Little Crow mega-scale projects that are currently going through national infrastructure importance adjudication. Central government has done a great job in the past few years of favouring anything but solar in the UK, and any large projects needing sign-off under ‘national importance’ have to come with a massive dose of risk. However, governments are short-lived thankfully, and any change has to be a good one surely?

Either way, neither Cleve Hill nor Little Crow will be among the first wave of post-subsidy UK solar farm build outs, so they can be easily decoupled from the real activity of 2019 that is the focus of this article.

The pipeline revealed

When the ROCs expired in the UK, there was a pipeline of uncompleted projects that amounted to almost 4GW of capacity. Over the past 18 months, new sites have been added, but many more removed from our analysis.

In fact, our in-house research team at Solar Media has only now completed a six-month research period where we have streamlined the pipeline to approximately 130 solar farms (250kW to 350MW) that we believe can be considered as truly ‘live’ today, with a total of 2.53GW capacity.

The best way to explain this is with data and graphics.

Before we go any further, a note on our methodology, in particular on pre-application sites. We keep projects officially submitted for EIA for a maximum period of 12 months, before deleting them. For the smaller projects (<20MW), if an EIA is required, we remove the site immediately from the pipeline. If a planning application has not been submitted within 12 months of the screening option, we remove the site also. There are only two – three sites that fall outside this method. This means we keep the pipeline as relevant as possible and are continuously flushing out the speculative screening opinions that are simply left as legacy planning portal entries.

While on the topic of methodology, it is worth noting that the project count about 12 months ago for the pipeline was well above 400 sites. However, we went through every site (especially the legacy ones) and if there had been no activity, we deleted the entries as abandoned/mothballed. This again helps keep the count number of 131 projects as real as possible. Finally, scant regard is paid to the theoretical expiry date (3 years) on planning approvals, as it is not difficult to extend the application validity period for experienced planning consultants.

Back to the analysis now of the pipeline.

As an aside, about 1.3-1.4GW of the 2.53GW capacity pipeline is comprised of new solar farm builds where ESS is an option (although often just namedropped in planning applications to keep all options on the table before seeking conditional approvals). Only a tiny amount (<10MW) is co-located with onshore wind. The rest is all based on stand-alone solar farms.

What can we expect to get built in 2019?

This has been the key issue we have been tracking now for the past couple of years in the UK. And we can at last reveal that many of the projects in the pipeline are getting ready to break-ground either before the end of 2018 or during the first few months of 2019. These projects will be the first to count as post-subsidy projects, all completed during 2019.

There are many drivers for the projects being fast-tracked now. Some of them are teetering on planning application expiration, and would rather not have to return to getting build-out timelines extended. Another factor we are hearing about is Brexit, and the fact that current economic models are set up now and nobody wants months of uncertainty thrown in once Brexit moves to the next level.

Indeed, for Brexit, we could have other factors that introduce unknowns to the equation.

The graphic below shows, for the first time, how the large-scale ground-mount segment of the UK has been progressing since the start of 2017. This includes the forecast for the current 2018 calendar year (with YTD large-scale ground-mount installations at approximately 96MW), and – more importantly – what might happen during 2019. We will be returning to this now on a quarterly basis, to see exactly how things evolve.

EPCs and component suppliers need to get active now!

Once we get into the subsidy-free build-out phase in 2019, it will likely be too late for many that would like to have revenue streams again from UK solar farms. However, what is due to happen in 2019 is not a bubble, and therefore, it would still seem to be good timing to get connected again with all the stakeholders behind the 131 active sites (and indeed the new ones to be added to the pipeline in the next 12-18 months).

All this information is available in the UK Large-Scale Solar Farms – The Post-Subsidy Prospect List report, which can be found here. This report uses all the internal resource from the Solar Media research team that has been tracking the UK solar market from well before the start of the FiT scheme before 2010. The database is widely regarded as the most accurate sales tool available for anyone seeking to benefit from UK solar farm activity.

Site acquisition to dominate UK solar in 2018 across completed and consented assets

While the UK solar industry is expected to remain in a transition phase during 2018 in terms of new capacity added, activity will continue to be dominated by leading asset owners, both through expansions of existing capacity and also buying distressed assets that could be completed before 2020

This article discusses how site acquisition remains the mainstay of UK solar today, shows the consolidation of large-scale assets across four key players, and explains why each is keen to tap into the market today for distressed assets that missed the ROC cut-off date on 31 March 2017.

The data shown below is taken from the January release of the UK Ground-Mount Solar Completed Assets and UK Large-Scale Solar Farms: The Post-Subsidy Prospect List reports, which provide all the key details on large-scale ground-mount activity in the UK market.

Octopus first to 1GW UK solar portfolio

Within the past few months, the big story in terms of UK solar portfolios was Octopus becoming the first asset owner to hit the 1GW level of operational solar capacity in the UK, dominated by sites accredited under the RO scheme.

2017 also saw further growth in portfolios from the other three key asset owners in the UK: Foresight, NextEnergy and Bluefield. Collectively, these four own one-third of the operational large-scale ground-mounted solar farms in the UK.

The top 10 asset owners account for 54%, and the top 20 approximately 70%.

These percentages are set to increase further over the next six months, with news of Canadian Solar’s UK assets likely to be offloaded, and additional short-term play owners finally selling smaller bundles of RO-accredited sites.

However, the new trend on acquisition would appear to be on sites that have grid-connection offers, full planning application, but missed out on being completed for ROCs or CfDs. The fact that these sites are now changing hands is a clear indication that plans are being put in place for new build-outs in the short-term.

Whether these sites simply get added to the growing energy storage pipeline in the UK remains to be seen, but given that most potential post-subsidy UK solar farms are going down this route, one would expect to see planning amendments being lodged by the new owners to repurpose the consented solar applications.

Large-scale ground-mount pipeline remains at 4GW

The pipeline of solar farms in the UK has been at the 4GW mark for the past few months, spread across approximately 340 sites. These include unused capacity from existing solar farms (that were downsized to 4.99MW for 1.2 or 1.3ROCs), distressed assets from legacy RO and CfD rounds, new applications that have been driven by co-locating new solar sites with energy storage, and continued build-out plans from utilities and water services.

The 4GW pipeline therefore includes a large component that is speculative in nature (approximately 1.8GW), and will not see any build progress for at least two years, at best. Approximately 200MW falls into a more likely build-out portion that could be the mainstay of 2018 solar farm additions.

This leaves approximately 2GW that is made up of sites that have planning consent and could be repurposed given the right set of conditions. However, a major part of this will eventually be abandoned if the economics don’t stack up, or developers give up hope in the absence of anyone to sell the plans to.

Interestingly, about 1.3GW of the 4GW is planned to have energy storage added, and planning provision (for the storage containers) has been made for many of these sites.

In fact, revenue streams from storage will be a key part of any 2018 solar farm builds in mainland UK, but this is just one part of the overall picture. Solar farms builds in 2018 will also likely be on sites that have been partially built with a single 4.99MW site. These sites have much of the build costs covered already, and they should certainly not be regarded as subsidy-free, regardless of the marketing collateral that accompanies them.

Fundamentals remain intact, but UK now on the global bandwagon

With subsidies for UK solar farms highly unlikely to emerge again, the UK now becomes one of many global markets looking for the correct blend of build costs to hit the point where ROIs are risk-free. In 2018, this will need storage and other soft costs to be factored in. Beyond 2018, we simply move one year closer to a true subsidy-free world.

By this point, we are likely to see the ‘big four’ of solar assets in the UK pass through the 3GW mark, providing one of the clearest signs that solar farms in the UK have indeed become a specific asset class, and a technology that will remain in high demand going forward.

 

Finlay Colville will be speaking on the subject of the UK secondary market at Solar Finance & Investment Europe, a two-day conference organised by Solar Media at London’s Grange City Hotel on 30 and 31 January 2018. More details on the event can be found here

Q&A: Tony Dalwood, chief executive of Gresham House, on the purchase of Hazel Capital

Last week, renewables developer and investor Hazel Capital was acquired by Gresham House in an attempt to take advantage of the opportunities present by “one of the fastest and most sought-after market segments in the alternatives sector”, specifically energy storage.

Tony Dalwood, chief executive of the asset management group, explained to Solar Power Portal what the acquisition means for both Gresham House and Hazel Capital; what projects will be brought forward from the existing pipeline; and what uncertainties lay ahead for UK energy storage.

 

Why has Gresham House decided to enter the energy storage market through the purchase of Hazel Capital?

We’re buying Hazel Capital which is an established renewables [company], historically focused particularly on solar and wind where [it] has a decent amount of assets under management. The last three years they spent quite a bit of time developing and executing on energy storage, of which they have now got over 30MW of operational assets. In the short term that should go up to 85MW of operational ESS [energy storage systems] and then a follow-on pipeline of over 100MW on top of that. 

So really we’re backing a team who’s delivered in the renewables sector in the past, and secondly we think there’s more to go for in renewables. Battery storage is one aspect where we recognise that it is at the start of its investability from an institutional standpoint.

What kind of opportunities are you seeing in Hazel’s pipeline?

We’re looking at their pipeline, which involves projects like subsidy-free solar and wind through to energy storage where there is a well-developed pipeline, into EV charging infrastructure as those are the areas of progress and product development.

How long have you been considering getting involved in the storage market and has the language and investment coming from government in that time helped you make the decision?

About 18 months, and it hasn’t played a role but it’s good to hear that the government recognises that the requirements are increasing for grid rebalancing and storage capability. But the actual structural, commercial opportunity is what we focused on.

There’s quite a lot of uncertainty around UK energy storage at the moment, particularly with changes to the grid services market being planned by National Grid for next year. Did you consider this when planning your entry into the sector?

It’s definitely been part of the process of analysis and consideration during the appraisal. Our summary is that this is a growing area of demand, grid rebalancing will continue to grow whether there is a change in the National Grid operation of that and what sort of contracts they’re putting out to tender, the specification has yet to be determined. But the growth of requirement for grid rebalancing will still be there and it will be larger in the years to come than it is today.

How will the acquisition affect the day-to-day of Hazel Capital? Are you going to be hands-on or will the management team at Hazel continue in the same vein as previously?

They will very much become part of the Gresham House group where we aim to support them in their central services, whether that be financial compliance though to investor relations and communication and then finally into the areas of product development and fundraising. So there’s going to be a structural integration of the business.

The subsidy and policy landscape for UK renewables has changed fairly rapidly over the last 18 months towards an subsidised model; are you expecting further generation projects to be brought forward or is the focus just on energy storage with Hazel Capital?

We’ll be focusing on energy storage amongst other things with Hazel and the team. We’re not building any subsidy based component into any of our pipeline in renewables. Energy infrastructure now has tariff-free or subsidy-free solar projects going to market so I think we intend to do all of the above but nothing that we anticipate will have a component of subsidy.

Inside Clay Hill, the UK’s first subsidy-free solar farm

Clay by name, clay by nature. Around 30 developers, manufacturers, financiers, journalists – and a politician or two – descended upon a 45 acre plot of land near Flitwick early on 26 September in various states of preparedness for the mud. Climate minister Claire Perry quipped that the site was appropriately named, but it wouldn’t dampen any enthusiasm. Clay Hill Solar Farm, formally opened by Perry around five minutes later, was a landmark achievement for UK solar.

At 10MW in size, Clay Hill Solar Farm is the UK’s first built in the absence of any government support. Construction started roughly two months after the Renewables Obligation slammed shut and long after the eligibility window closed. It was not one of the few lucky enough to receive Contracts for Difference support before the government whipped that particular carpet out from under the industry’s feet. Clay Hill, it transpires, has been financed without subsidy.

The immediate question from the industry was simply; How?

Anesco has worked tirelessly with its supply chain to whittle its costs down as much as possible, so much so that Perry lauded the company’s “supply chain engineering” in opening the plant. Chinese manufacturer BYD supplied more than 30,000 315W poly solar panels for the project alongside 6MW worth of battery storage, housed in five 1.2MW containers. Anesco’s relationship with BYD spans back more than four years and the duo will continue to work together in the future.

The inverters, supplied by Huawei, also play a pivotal role. Anesco is the first in Europe to use Huawei’s new 1,500V inverters which make use of various innovations to both boost power yields and fail far less frequently. Each of the 156 inverters includes maximum power point trackers and 12 directly connected string inputs which improve the flexibility of PV strings, maximising yields further.

The site too was built under very specific circumstances. Adjacent to Clay Hill is another, entirely separate solar development dubbed Hermitage. That 5MW site was connected under 1.2 ROCs and established all the required grid connections, further reducing the cost of Clay Hill’s development.

The export of generated power – estimated to be more than 9,000MWh per year – will also be backed up by revenue streams linked to the batteries. National Grid, the UK’s system operator, has been forthright in its need to procure grid balancing services from generators and batteries alike and Anesco is only too keen to take them up on the offer. Clay Hill will bid for revenue streams from various tenders – both Enhanced and Fast Frequency Response, and the Capacity Market – when ready.

It’s for this precise reason that, interestingly, the batteries are currently sitting idle. One of the prerequisites for the bidding into the Capacity Market is that all projects hoping to pre-qualify must be newly built, for the mechanism itself to truly claim to be stimulating new capacity. Anesco, bending – but certainly not breaking – the regulation will therefore not be turning the batteries on until after they are expected to be pre-qualified to bid for Capacity Market tenders in mid-November. The batteries will also be brought into Limejump’s aggregation, further strengthening the business case behind co-locating 6MW of batteries with 10MW of ground-mount solar. 

Given the Goldilocks-esque situation Clay Hill has benefited from it would be easy to conclude that this project is a one-off. A fluke. But that is to do Anesco’s endeavours an injustice and to discredit a significant amount of ingenuity from the entire solar supply chain.

The message to take then is also not that grid-parity solar – the fabled destination of travel for all renewables – is here and now and, to their credit, Anesco has made it abundantly clear that this is not what its announcement is about. The company’s chairman Steve Shine said that the company does not need subsidy. Patently, it doesn’t. But it, and more importantly its financiers, need certainty if they are to back projects like this from coming to the fore and help PV on the grid-parity glide path.

Subsidy-free – or market-stabilising, as is the government’s apparent favoured term – Contracts for Difference awards could be one such way of providing certainty. So too would far more concrete, reliable and regular grid balancing services tenders that have been teased by both National Grid and Ofgem.

Anesco insists it can achieve more projects like Clay Hill as UK solar continues on that glide path towards grid parity, and there are whispers that further developers could join them sooner rather than later. But it’s Anesco that has stuck its flag in the ground first and Anesco that will be remembered for breaking UK solar’s subsidy-free duck.

The announcement made national (and international) headlines. Broadsheets like the Financial Times and the Telegraph featured it prominently, as did Channel 4 News that evening. It was even mentioned on the Department for Business, Energy and Industrial Strategy homepage in what is certainly the most positive solar-centric headline to do so for quite some time.

BEIS was quick to revel in Anesco’s achievements. It now needs to deliver and ensure the limelight is shared. 

UK large-scale pipeline approaches 4GW level as new 300MW site moves closer to planning

The pipeline of large-scale solar farms in the UK has now reached 3.9GW, comprised of 340 sites, according to the latest release of the UK Large-Scale Solar Farms: The Post-Subsidy Prospect List report.

While we continue to log new screening applications, full planning applications, and plans for unused capacity from previous partially-completed ROC sites (mostly as downsized 1.2 RO schemes), the most significant update during the past month has been our inclusion of a 300MW solar farm in the south of England.

This single site accounts for most of the new capacity added in the past month, compared to the 3.55GW of capacity included in the previous monthly report release.

I will be delivering a presentation on the post-subsidy pipeline next week at the Solar Business Conference of the Solar & Storage Live event at the NEC in Birmingham (3-5 October 2017).

However, for many reading this article right now, the burning topic will relate to our breaking news here of plans for a 300MW solar farm in the UK.

The UK’s 300MW solar farm uncovered

It seems like the rumours have been around forever, and I can recall discussions back in 2015, when excited component suppliers were readying prospect lists with the inclusion of a 300MW solar farm opportunity in the south of England.

Back then, the only thing known was mainly related to the county where the site was being considered, and not much more.

Of course, during 2015 and 2016 (and the first quarter of 2017), all attention was on building out under ROCs, FiTs or CfDs for the lucky few. The months and years passed, and signs of the 300MW solar farm were largely parked to the side, awaiting tangible facts and figures.

However, things have been moving since the end of 2016, and for the first time, we are now including this site in our UK Large-Scale Solar Farms: The Post-Subsidy Prospect List report, with the latest release due out later this week.

Joining the dots on the 300MW solar farm stakeholders

Often, the more developers crave for publicity during the early days of a mega-solar planning process, the less likely it is to come to fruition. Generally, handshakes and smiles on speculative joint development agreement press conferences are done to convince governments or utilities on the need for the site in the first place, or to get the attention of a cash-rich backer to finance the plan.

This is certainly not the case for the 300MW solar farm site in the UK. The initial site development is understood to be spearheaded by one of the most credible and successful solar farm developers in the UK, and partnered now by a European-based developer/EPC with an equally-impressive track-record in large-scale solar farm build-out in the UK and on the global stage.

The location is thought to be a few miles inland from the southeast coastline of England, with energy from the solar farm possibly being fed into unused capacity that was put in place for a major offshore wind farm infrastructure that was only partially completed.

Having visibility on the stakeholders behind the scheme, the location of the site, and the availability of the grid to export the energy to, are three very important parameters in terms of any solar farm proposal, regardless of the size.

With these thought to be in place, this goes some way to explaining why we are only now including the 300MW site in our pipeline analysis, albeit with still cautious estimates on any ground-breaking timelines or likelihood of completion.

Final jigsaw pieces still pending

Several hurdles remain, as would be expected of a major infrastructure project in the UK. These include: the planning process (both governmental and local), infrastructure financing, and revenue streams if completed.

However, by far the most important relates to planning. Without planning approval (which moves to a different level here, outside of the LPA) – or indeed simply moving past environmental impact assessment – everything else is somewhat irrelevant.

So for now, all attention is on the planning side of things.

Rest assured, the second this scheme hits the public domain from a planning standpoint, every news outlet in the UK will be claiming breaking-news status within hours, supported by the usual suspects from trade associations and so-called energy ‘experts’ or ‘consultants’ being asked to comment.

This will mark the official ‘day-one’ of the 300MW solar farm in the public domain. For those wanting to get earlier visibility, the UK Large-Scale Solar Farms: The Post-Subsidy Prospect List report captures our pre-application estimates of the site in question.

Details of the full UK solar pipeline will be covered in my talk next week at the Solar Business Conference of the Solar & Storage Live event at the NEC in Birmingham (3-5 October 2017).

UK post-subsidy solar sites revealed as pipeline exceeds 3.5GW

According to details contained in the first release of the new UK Large-Scale Solar Farms: The Post-Subsidy Prospect List report, from the in-house market research team at Solar Media Ltd., the pipeline of large-scale ground-mounted solar farms now exceeds 3.5GW, across more than 330 sites.

This article takes a look at summary data from the new report, providing key trends and indicators of the pipeline, consisting of potential solar sites that could be built during 2018-2020, in the absence of legacy FiT and RO revenue streams.

The first graphic below shows the allocated pipeline capacity, segmented by site size.

The next graphic shows the geographic split by pipeline capacity, using standard regional segmentation covering Great Britain and Northern Ireland.

The site location analysis is shown below. Most of the capacity remains sited on agricultural land (typically grade 3), with disused airfields and former landfills making up the two other key segments. The potential of landfill sites has been successfully exploited in the UK over the past few years, and remains a key priority for councils and waste management services nationally.

A key question we get asked regularly regarding the pipeline of solar farms relates to the status of the planning application process. A summary of the pipeline data in this regard is shown in the graphic below.

The issue is of course critical, with full planning approval, and subsequent conditional discharges being implemented, prior to any site completion in the UK. This is nothing new, but places one of several key requirements for all the sites in the pipeline. (Other key issues include a grid-connection offer where necessary, raising infrastructure finance, and having viable external revenue streams post-build.)

In fact, the vast majority of sites already have planning approval, in part due to the number of sites that have spilled over from legacy FiT/RO planning applications. Many of the unbuilt partial (or surplus) RO-based sites in the database have already got grid-connection to accommodate site completion to original RO intended red-line capacities before the 5MW limit was imposed.

Of the applications that have gone in to planning since July 2015 (effectively marking the subsidy-free transition point from a planning perspective), the success rate of applications has been very good. This can largely be attributed to there being a smaller number of (more long-term driven) developers that understand the need for site-selection from the start, thereby greatly simplifying the screening and public consultation phases ahead of LPA decision-making.

The other main takeaway from the graphic below is the large number of sites making up the Screening/Scoping segment. This includes sites being proposed from a wide variety of stakeholders, including local councils, established solar project developers, and others such as water utilities.

It should be noted also that some of the plans being scoped for very large sites (including a 300MW site being considered in the south of England) are not included within our pipeline, owing to lack of details yet hitting the relevant LPAs.

In releasing the new report, we have established a new methodology to help users of the database to fully understand the history and proposed finance mechanisms at the site level. This feeds also into our forecasting tool, discussed in more detail below.

There are two key funding/revenue-stream metrics we track now at the site level. This is more specific to the new post-subsidy environment, and these are shown below in the following two graphics.

The first graphic shows the original revenue-stream/incentive-scheme that was targeted by the original project developers of the sites. We have tagged all the carry-over projects from the former incentive climate with the term ‘Legacy’. This allows easy filtering of projects that were driven purely by former government schemes (FiT, RO, and CfD), and those that are firmly in the post-subsidy regime and are seeking new forms of revenue streams when built.

The other categories include NIROCs (relevant still within the pipeline due to grace-period compliance), and RO Surplus sites (known unused capacity that is being driven by adding energy storage and/or private-wire to existing 1.2ROC accredited sites).

The second key financial category is by far the most important, and effectively the single most critical issue that will determine how many of the 330-plus sites actually get built.

While the simplistic view of post-subsidy is too often confused with grid-parity claims, the reality is that new built solar farms today require alternative revenue streams, such as having a private-wire in place or co-locating with energy storage systems. Sites built out in 2017 and 2018 are likely to have a range of revenue streams including private wire, PPAs, and energy storage, with a combination of on-site generation and exporting.

Related to the revenue justification of the new solar farms is the co-location issue. The graphic below shows the capacity of the pipeline where there are known plans to co-locate with (typically existing) wind farms or (proposed new) energy storage systems.

Not surprisingly, most of the capacity is based on stand-alone solar farms, but the >700MW of solar capacity where there are plans to add energy storage systems is one of the most encouraging factors increasing the prospects of a post-subsidy rebound being clearly visible during 2018.

It would seem today that the scope for developers to return to approved solar farms and introduce material amendment documentation for ESS inclusion is certainly possible, and as soon as the first built sites in the UK are announced, we could see an uptick in planning activity here.  

Finally, across all the 300-plus sites in our new report, we have included a forecast probability factor. This is based on a host of factors, from planning status, co-location plans, but importantly having frequent discussions with developers, EPCs and component suppliers.

The graphic below shows the consolidated output from the sites, across different build-out probability entries. Sites with probability of completion >50% today are relatively small, as is fully expected based on the industry still being in no-subsidy mode, rather than post-subsidy risk-free positivism.

The spike allocated to 20% reflects the high levels of capacity coming from new plans (pre full application, and typically at site scoping or screening/EIA stages with LPAs), with many of these projects falling into the >30MW site size bracket.

Our in-house research team makes weekly (sometimes daily) forecast adjustments to sites in the report database, with the changes supplied at the end of each month in the new report release.

The September release of the new UK Large-Scale Solar Farms: The Post-Subsidy Prospect List report is now available, with full details of the 330-plus sites shown. The list is ideal for component suppliers (modules, inverters, mounting), EPCs and asset-owners/vehicles needing early visibility on prospects and opportunities in the UK for the 2018-2020 period.

The report has daily market updates from our team, is released monthly, and is supplied in flat-file database format for easy data manipulation or exporting to CRM tools.

Who will win the UK secondary solar race?

There may not have been an awful lot of primary market activity in the UK since the end of March, but the country is more than making up for it in its booming secondary market.

Earlier today NextEnergy Solar Fund (NESF) revealed that it had completed a further two asset acquisitions, taking its operational UK portfolio to more than 500MW spread across 50 sites. In doing so it became only the second asset holder to own more than half a gigawatt, still trailing the UK’s largest owner – Octopus – which owns around about twice that amount.

NESF is on a hot streak. Earlier this summer it set its sights on as much as 600MW of the secondary market, before later that month raising more than £125 million to fuel such a spending spree.

Meanwhile, renowned asset management group BlackRock made waves in the UK market late last month when it announced that it was looking to invest up to £1 billion to acquire 1GW of operational UK solar from a standing jump. George Osborne’s part-time employers tapped up Lightsource to help them with the initiative, dubbed Kingfisher, with market consolidation high on its agenda.

Lightsource CFO Paul McCartie told Solar Power Portal that Kingfisher would not exactly be picky over what it sought to buy, but it would also not be rushed. It hopes that its ability to access both levered and unlevered financing structures would set it aside from other players in the market and Lightsource could still shift more of its in-house developed sites to Kingfisher on top of the 156MW seed portfolio it handed over to get things started.

And then there’s Vortex. When it fended off stiff competition to land the 365MW, 24-site ex-SunEdison portfolio from yieldco TerraForm Power late last year, the EFG Hermes-backed owner was catapulted to the upper echelons of utility-scale solar in the UK. The transaction completed in May and the portfolio was refinanced not long after, but Vortex has said it intends to bolt on more renewable capacity.

But what of other likely players? Foresight, comfortably among the UK’s largest solar owners with 475MW, said earlier this month that while it remained on the hunt for new sites, it would be taking a “prudent approach” and would only buy projects that were net asset value (NAV) accretive. It is also one of a number of asset owners with interests overseas, looking specifically at Australia and the US.

Bluefield struck a similar tone earlier this year when it moved to cool any expectations of it making a big splash in the secondary market, instead looking to optimise and make the very most of what it has already.

With different funds seemingly taking different approaches, it begs the question: Just how consolidated will UK solar become?

Writing for SPP earlier this year, our head of market research Finlay Colville suggested that somewhere between 1.5GW and 2.5GW could change hands over the next 18 months, a figure which has seemingly garnered consensus as a number of funds have muttered similar figures within their results call.

To put that into perspective, there is around 7.6GW of utility-scale solar in the UK, meaning that as much as one-third could come under new ownership by 2019.

Much of this is, predictably, expected to go to the more established names and players, most of which have been discussed here, but the extent of which remains to be seen. There are obvious benefits to operating at that scale, and how the UK secondary market consolidates over the next 18 months will have a lasting impact on the entire UK solar supply chain.

Will Octopus cement its position as the UK’s largest owner? Just how much of this 600MW under consideration will NESF land? Will Foresight, and Bluefield for that matter, continue to be as prudent as they suggest? Or will the newcomers of Kingfisher and Vortex shake the status quo? The future shape of the UK ground-mount market looks set to be decided in a handful of boardrooms. 

Gigawatts of subsidy-free solar farms being planned for UK market rebound

The UK solar industry is set to emerge as one of Europe’s leading post-subsidy large-scale solar markets from 2018 onwards, with plans being scoped, submitted and approved in the past 12 months alone that comfortably exceed the gigawatt-level of new site deployment.

Sites are typically being planned now in the 20-50MW range, with the largest site going through full planning submission today with a potential capacity, when built, above 100MW in size.

This article reviews some of the factors at play, discusses the drivers, and explains the business strategies being employed by the developers now set to reshape the next strong uptick in UK ground-mount solar farm builds.

More information and discussion will be provided in the forthcoming webinar, UK Multi-GW Solar Pipeline Revealed, on Wednesday 9 August. Details on how to register for the webinar can be found here. Other sources of market intelligence are outlined at the end of this blog.

The transition phase to un-subsidised solar farm deployment

Much of the global solar industry remains fixated on legacy solar markets that existed in a time when subsidies were widely available. Not without good cause, as this has shaped global PV deployment until now and will have a massive bearing on annual deployment levels over the next few years.

But long-term, solar has economic and environmental drivers that work in the absence of local subsidies, and the case for this will become more widespread and prevalent during the decade from 2020 onwards.

In looking at the 13GW of solar in the UK, clearly this only existed because incentives were in place and eager participants (developers, EPCs, component suppliers, planners and investors) drove the markets to levels that could only be obtained in a supply-driven climate.

That knowledge learned is essentially what puts the UK in a prime position to make the move from incentives to post-subsidy a relatively painless exercise.

Other mainland European countries that went through similar supply-driven PV deployment phases did so effectively too early in the day, with reference markers (components, capex, financing, energy market dynamics) simply not conducive to restarting in the absence of continued risk-free returns from respective governments or utilities. Spain for example had to endure almost a decade in the PV wilderness between its brief flirtations as global driver in 2008, to the recent gigawatt-levels of solar allocated by auction in 2017.

So, being late in the game for solar uptick in Europe has its benefits, and if in any way intended by policy makers, then immediate cabinet promotions should be duly rewarded!

Of course, with the solar industry hard enough to predict three months out, far less three or five years, it is just pure luck that the UK boom took place when incentives were a must, and finished when solar was on the brink of being viable without subsidies.

One after another, government ministers in the UK trumpeted verbiage along the lines of ‘solar has to stand on its own two feet’, and ‘subsidies are being cut back to help the industry become self-reliant’. No-one ever believed that the motives for reducing or removing subsidies were to help the industry, but to slow down uncontrollable deployment rates and the financial implications of these.

Putting all that aside, as few would have acted differently if placed in government offices again, we are now potentially in a place where government support for solar can be rationally considered, without the fear of having to subsidise and lose control, and this is a game-changer as momentum continues to build that future CfD rounds could be highly favourable to solar PV as a prioritised technology of choice. What a difference a few years can make.

UK planning legislation remains the definitive reference point

Over the past few years, there have been many claims from developers as starting large-scale solar farms, post-subsidy. However, as long as these plans remain absent from any planning process through LPAs, they are just plans and no more. Every solar farm needs full planning application approval as a bare minimum, as the planning portal remains the leading marker for any future deployment prospects.

In this respect, we can also see clearly the sites that are a spill-over from development that had been done for Contracts for Difference submission in the past, or sites that were either partially done under ROCs or simply never got to shovel-ready stage to generate financing under 1.3 or 1.2 ROCs.

Removing these, we have the ‘real’ pipeline sites that were put into planning during 2016 and 2017; well after planning deadlines for ROCs and with no visibility of any CfD rounds for solar. As such, it has to be inferred that subsidy-free operation of these is envisaged, or at a minimum using shifting to a different business model and revenue streams and carrying a different risk profile for investors.

Understanding the 3GW+ of pipeline sites

Currently, the post-subsidy pipeline of large-scale solar farms in the UK exceeds 3GW, across more than 300 sites. Applying the timeline-based filter (as discussed in the section above), we can segment the pipeline now to see how much of the 3GW is arising from specific post-subsidy activity.

The ROC portion of the pie-chart above is based on sites where planning approval was obtained, but the developers failed to move sites forward before the 1.2 ROC deadline on 31 March 2017, and a bunch where part of the sites were completed (typically 4.99MW under 1.2 ROCs) but where material amendments were approved by LPAs that ring-fenced potential expansion phases to access existing red-line planning approval.

A number of the sites falling under the RO/CfD list have also been acquired as primary SPV acquisitions and reworked through planning to allow the addition of energy storage systems, either intended for storage auction mechanisms or as site-specific subsidy free solar/storage construction during 2017/2018.

The most interesting segment of the pie-chart above however relates to the post-subsidy part. These are new sites that have emerged in 2016 and so far in 2017. Approximately 95 sites fall into this category, adding up to more than 1.3GW. Incredibly, more than 25% of these (on 560MW worth of new solar farms) are being planned to include energy storage units.

In terms of the size of projects within the full 3GW-plus of projects, most of the capacity falls into the 20-50MW site level – again confirmation of the intent to move these forward post-subsidy and applying economy-of-scale economics as a key driver for return-on-investment metrics.

Indeed, in the past few days, full planning documentation has been tracked by our in-house research team at Solar Media for the UK’s first 100MW solar farm. This potentially hints at just the type of planning activity that is necessary to fully support the transition to solar farms moving to subsidy-free and at very large scale. Given the developer in question and the site location, we expect this site to be approved in the next few months, raising the prospects of a 100MW solar farm being constructed in 2018. What a start to subsidy-free deployment this would represent for the UK solar industry.

Forecasting build-out probability in the analysis

As with every pipeline of planning or scoping, it is essential to apply cautious forecasting, in terms of the probability of completion. Clearly, if a site is simply at screening and waiting to see if an environmental impact assessment is needed, the chances of final build-out are at the 10-20% level, depending on the developer in question and whether the company is using as a tentative placeholder or as a serious attempt to submit a full application.

The history of the site also needs to be factored in; for example, was the site intended purely for ROCs and is too small to attract any real attention in the absence of subsidies? Is there activity at the SPV level that would suggest intent on new site owners to rework an existing approved application?

But probably the most useful reference point in the history of the site applications comes down to the current developer/owner, and the track-record in UK solar farms and seeing through shovel-ready sites either through in-house EPC work or packaged into shovel-ready site bundles and sold to global developers that have the financial backing to take on large solar farm developments and see them through to completion and ultimate third-party institutional ownership.

The figure below shows a capacity-based segmentation based on adding up site-specific build-out probability factors. The key part to view is in the >50% segments that capture the most viable sites for the 2017-2018 time period. Many of the other sites will end up terminated or not seen through for a host of reasons, as is normal with any pipeline of applications. But a bunch of sites here will move to the >50% bands in the next 12 months, in addition to new applications yet to be lodged. This is expected to keep the hot prospect listing an ongoing research exercise and tracking these for prospective component suppliers (modules, inverters, mounting) and EPCs will be essential reading over the next 12-18 months. This is particularly true for the main suppliers and EPCs that benefited from the 2013-2017 UK ground-mount market in the UK, and retain European operations ahead of the regional subsidy-free or auction-driven uptick from 2018 onwards.

Don’t discount the public sector

Interestingly, more than 10% of the 3GW pipeline is coming from the public sector. Here we are lumping for convenience local and borough councils and utilities (and in particular water utilities) as a grouping. Some of the plans at the council level are highly ambitious in seeking strong solar farm contributions to meet long-term sustainability and renewables aspirations, and some even include co-located solar and storage sites. This grouping has historically offered good business to local UK-owned EPCs and sub-contractors, and this trend appears to continue in the post-subsidy climate also.

Learning more about the sites and drivers for UK subsidy-free solar farms

Visibility today is critical for module/inverter/mounting suppliers, potential EPCs, and indeed asset owners hoping to have first refusal on shovel-ready status. When the market has moved forward in the next 12-24 months, those companies looking for the opportunities then may simply be arriving on the scene too late.

Solar Media is undertaking several fact-finding activities in the next few months to help in this respect.

Please register here for our free webinar, UK Multi-GW Solar Pipeline Revealed, on Wednesday 9 August.

The Solar & Storage Live event at the NEC in Birmingham, UK on 3-5 October will showcase subsidy-free UK solar at the Solar Business Conference on 4 October 2017. More information on registering to attend for the talks can be found here.

Finally, our in-house Market Research team is set to launch a new monthly report this month, listing all the projects that make up the 3GW of new post-deadline UK solar farms. To register to get email alerts on the release date and full content of the report, please note your interest through this link.

© Solar Media Limited