Subsidy-Free Solar?

Has solar’s day in the sun finally arrived? It’s a question that has long since lost any veneer of cleverness simply because it’s been asked so many times at this point, and yet here we are: the UK just hit a major milestone this week when it opened up its first subsidy-free solar farm. The 10MW project is located in Bedfordshire, and importantly it was constructed with no government-backed minimum rate guarantees for Anesco, the company behind the facility.

Importantly the project also has 6MW of storage capacity on site, which will help it contribute a more stable supply of electricity to the grid. Storage is a necessary complement to intermittent renewables, whose production is subject to the whims of weather. Interestingly, the storage component of this project is the reason why it was economical to construct in the first place. “It wouldn’t pay with solar by itself at the moment…it needs the storage as well,” Anesco board chairman Steve Shine told the FT.

But the fees Anesco will take in for helping the UK’s National Grid match supply with demand by providing storage capacity wouldn’t have pushed this new solar farm into the black if it weren’t also for the dramatic and ongoing fall in panel prices. This is, therefore, evidence of progress for an energy source that thus far has made only a minor impact on global power production.

The Bedfordshire solar farm’s construction represents a willingness and, given the right conditions, the capability of moving beyond government subsidies into the competitive marketplace. That said, there’s still a long way to go. Cheap panels are still the result of a global race to the bottom that is bankrupting companies in a number of countries, many of whom rely on state stipend to stay afloat. Furthermore, as a spokeswoman for the UK’s Solar Trade Association said, “government shouldn’t then assume the industry is away — it isn’t.”

At this point, solar is still only flourishing on the fringes, and when it has entered the mainstream (as we’ve seen in Germany), it’s done so only on the back of tremendous government support that is accompanied by rising costs for the consumer. Costs need to drop further before it makes a greater impact, and the issue of scalable, commercially affordable storage options will continue to be a stumbling block for solar’s growth going forward. But this new project’s viability without subsidies is still a big deal, because it’s a step in the direction the industry ultimately must move towards.

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