Solar companies plan to cut income to help UK households – pv magazine International

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Solar Energy UK members have made positive noises about a plan to switch from historical fixed-payment incentive contracts to contracts for difference, which would limit the profits they would receive from soaring energy prices .

On the day Liz Truss was named the new UK Prime Minister, Solar Energy UK said its members were considering backing a call to cut fixed-price incentive payments under the landmark renewable energy bond payment scheme (RO).

Under the RO scheme, which ended in 2017, renewable energy producers receive a fixed price for each kilowatt-hour they produce, then sell the electricity on the open market, where the gas crisis has seen the prices skyrocket. This has prompted calls from across the political spectrum to limit excessive profits by energy companies, with suggestions such as a one-off tax on generators and a price cap on electricity.

The UK Energy Research Center has proposed two measures to cap the price clean energy generators would receive for the electricity they produce. One proposal involves generators receiving a fixed end price for their electricity, rather than being able to negotiate on the open market, while retaining their fixed RO incentive payments per kilowatt-hour.

A second suggestion would be to trade RO contracts for trades in line with the current Contracts for Difference (CFD) incentive program. Under CFD contracts, bidders make a competitive bid to obtain the lowest guaranteed “strike price” for the electricity they produce. Generators receive the wholesale electricity price for the electricity they produce and, when this figure is lower than the strike price agreed upon in the tender, the government makes up the difference. When the money received from the wholesale market for clean electricity is higher than the strike price – as it is now and likely will be for some time – the producer returns the difference to the government.

With both proposals already endorsed by RenewableUK and the wider Energy UK member association, Solar Energy UK said this week that its members would be open to such reform.

“We have started to review the renewable energy support reform proposals, which we will need to be sure will work as intended to both support the sector and tackle the rising cost of living,” said Chris Hewett, CEO of Solar Energy UK, in a press release. Release. “There’s a lot to work out the details, but major industry players are very supportive of the principle.”

Offering a voluntary approach to limiting excessive profits could help the solar industry stave off the threat of a windfall tax that would be far more damaging to investor confidence, according to Solar Energy UK. The trade body has also been at pains to point out that solar power tends to sell out well in advance, meaning generators have yet to receive the windfall of profits that has been reported recently. by fossil fuel companies.

Prime Minister Truss, whose appointment was confirmed this week after a vote by Conservative Party MPs, declined to say how she planned to help British households and businesses cope with soaring energy bills, other than by reducing taxes. She has pledged to present her strategy on the UK’s cost of living crisis this week.

As environment secretary, new Prime Minister Truss was a vocal critic of solar power because of the panels’ visual impact, their potential intrusion into farmland and the cost their incentive schemes add to household bills after energy providers pass on these commitments to consumers.

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