EDF Renewables has announced plans for an up-to-50 MW solar farm, Bloy’s Grove, between the villages of Swainsthorpe and Mulbarton, just south of Norwich.
A number of ecological and other feasibility surveys have been carried out and the company is now consulting with local people about the proposal ahead of submitting a planning application to South Norfolk District Council in the spring.
Online and postal community engagement is being carried out and members of the public are encouraged to visit EDF R’s Bloy’s Grove website for further information, to register for live online events and to provide feedback ahead of the close of public consultation on 11 January.
If planning permission is granted, a community fund of up to £10,000 will be paid annually, depending on the final size of the scheme, for the 35-year lifetime of the project.
EDF Renewables Director of Solar and Onshore Wind Development Mark Vyvyan-Robinson said: “This is an excellent site for a solar farm, which is suitably sunny and with a nearby grid connection.”
He added that the company has a number of solar projects planned in the UK.
As part of the project EDF R will improve biodiversity on site by, where appropriate, planting more hedgerows and trees, installing beehives, and setting land aside for grasses and wildflowers.
This environmental enhancement will be established in consultation with the council and maintained throughout the life of the solar farm.
Downing Renewables & Infrastructure Trust PLC (DORE) has announced plans for an initial public offering to raise up to £200 million to invest in a diversified renewables portfolio including wind, solar, hydro and geothermal along with other infrastructure assets in the UK, Ireland and Northern Europe.
It said it has identified and expects to secure an option to acquire a seed portfolio for up to £50m comprising of around 96 MW of operational UK solar PV projects with an average operating track record of six years, generating EBITDA of £9.9 million in the year to 31 March 2020.
In addition, it has identified a significant pipeline of assets with a value in excess of £1.5 billion. Downing is in advanced discussions to secure exclusivity in relation to assets with a total equity value of approximately £70 million in the wind and hydro sectors in Sweden and Norway.
The proposal will see the company admit its shares to trading on the London Stock Exchange’s main market and it said it had already secured up to £30 million of cornerstone investment from Downing LLP, Downing managed funds and existing clients.
Head of Energy and Infrastructure at Downing LLP Tom Williams said: “DORE will focus on delivering sustainable income streams and capital growth by investing in a portfolio of renewable energy and infrastructure assets diversified not only by technology but by geography, project stage and revenue.”
It said this would allow the company to enhance returns by investing in assets that are in construction or are construction-ready. “By constructing a truly differentiated portfolio in this way, we reduce our dependency on any one renewable energy resource, any single jurisdiction and any one set of policies and regulations,” Williams added.
“Diversification introduces a natural hedge by reducing the impact of seasonal variability and increases the stability of revenues both throughout the year and year-to-year.”
Downing, the Company’s Investment Manager, has managed 116 investments into solar parks, wind farms and hydroelectric plants since 2010, delivering an unlevered weighted-average gross IRR of 9% as at 30 June 2020.
The company said active asset management was fundamental to the investment strategy, and its asset management team will be involved throughout the construction period and will oversee key stakeholders to ensure assets are built to the highest standard.
Malaysian state power company Tenaga Nasional Berhad (TNB) has acquired Beaufort Investment’s controlling stake in a 365MW UK solar portfolio valued at £500m, taking full control of the projects.
TNB had acquired a 50% interest in the portfolio from TerraForm Power in 2017 through Vortex Solar UK, a wholly-owned subsidiary of TNB 50:50 joint venture Vortex Solar Investment with Beaufort Investments.
Vortex Energy, a global renewable energy platform managed by Beaufort Investments, a subsidiary of EFG Hermes, held the managing and controlling stake in Vortex Solar.
The portfolio has an average asset age of six years, power purchase agreements with European energy companies and utilities, an “attractive ROC regime” and a long-term debt package from lenders including Santander, RBS and ING, said Beaufort.
The portfolio achieved earnings before interest, tax, depreciation and amortisation £39m in 2019 with an 84% EBITDA margin, exceeding its budget.
Vortex Energy said the portfolio continues to meet its targets in 2020, despite the global challenges.
EFG Hermes private equity and asset management head Karim Moussa said: “We continue to demonstrate our ability to pursue the full cycle of raising capital, investing strategically and exiting major renewable energy portfolios.
“Since launching Vortex in 2015, we have combined net 822 MW of premium assets while investing more than €1.3 bn in the sector in developed markets.
“We have been consistently delivering attractive returns to our shareholders and partners by aggregating and enhancing assets and then selling portfolios to strategic long-term owners of renewable energy assets.
“This is the second major exit following the disposal of our 49% stake in a 1 GW wind portfolio to funds managed by JP Morgan last year.”
The Beaufort team now plans to establish Vortex 4, a renewable energy platform that will target global generation, storage, distribution and technology businesses.
Moussa added: “We are excited about future global opportunities in renewables and the wider clean energy space, we shall aim to commence our fundraising efforts by the end of 2020, with anchor investors already showing increased interest in our next endeavour Vortex IV.”
One of the assets, the 14.4 MW Charity Farm, is backed through Contract for Difference (CfD).
BlackRock’s Global Renewable Power team acquired a 90% stake in the portfolio in 2017 through its partnership with Lightsource BP, which maintained a 10% stake in the portfolio.
Greencoat has acquired 100% ownership from both vendors.
Lightsource BP will continue to provide ongoing asset management and operational services.
Greencoat Capital’s Karin Kaiser said: “This is a brilliant portfolio of proven operational assets that will provide our clients predictable cashflows with inflation protection over the long term, whilst contributing to the decarbonisation of the UK’s electricity sector.
“The acquisition takes installed solar capacity to over 880 MW, across the Funds we manage, generating enough power across the year to power all the homes in a city the size of Manchester.
“We continue to see a strong opportunity for solar aggregation in the UK, and an active near-term pipeline.”
BlackRock Renewable Power global chief investment officer Rory O’Connor added: “The structural transition to a lower carbon future is providing attractive investment opportunities in renewable power globally.
“There is a significant re-allocation of capital underway that underscores the resilience of the sector, even while public markets face uncertainty as the world addresses the Covid-19 pandemic.
“This asset realisation comes as we achieve the second close of our Global Renewable Power Fund 3 at $1.5bn, reflecting the expertise and depth of the BlackRock Renewable Power platform and strong ongoing demand from our clients looking for renewable power and climate infrastructure investment opportunities that can deliver attractive and sustainable returns.”
The Global Concentrated Solar Power market accounted for $5.57 billion in 2018 and is expected to reach $14.84 billion by 2027 growing at a CAGR of 11.5% during the forecast period. Some of the key factors influencing market growth include growing environmental concerns over carbon emissions and efforts to reduce air pollution, increase in government support for the adoption of renewable technologies, rise in energy demand & capability to supply power without CO2 emission. However, the higher cost of generation compared to other renewable technologies is restricting market growth.
Concentrated solar power energy is the generation of electricity via mirrors to concentrate the sunrays to the temperature varying between 400 and 1,000 C. This energy is then usually employed in various applications such as heating fluid, mainly water or oil, which in turn produces steam or hot air. The steam produced is used to drive turbines connected to a generator to generate electricity. There are different types of mirror shapes and sun-tracking methods to provide useful energy, but all of them work under the same principle of driving a heat engine to generate electricity that can then be fed into the grid. Thus, concentrated solar power energy is a carbon-free source of electricity and is best suited to regions with strong radiation such as Southern Europe, Northern Africa and the Middle East, South Africa, parts of India, China, Southern U.S., and Australia.
Amongst technology, the parabolic trough segment led the overall concentrating solar power market during the forecast period. A parabolic trough is one of the oldest technologies used to generate electricity from concentrated solar power. All parabolic trough plants used presently are “hybrids,” and they utilize fossil fuel to supplement the solar output during low solar radiation periods. These systems are applicable in all types of end-user industries such as utilities, Enhanced oil recovery, and other end-users such as mining and desalination among others. Parabolic trough technology is the most commercialized and mature technology in the CSP technology arena.
By Geography, The Asia-Pacific concentrated solar power market offers lucrative opportunities for key manufacturers, owing to rapid installation capacity of solar energy to increase renewable generation. Besides, China is actively boosting the growth of the market to cope up with its severe pollution problems and develop its domestic manufacturing industry. Furthermore, the availability of low labour has led to an increase in energy production through concentrated solar power, which fuels the growth of the market in the region.
Some of the key players in global concentrated solar power market are Shams Power, ACWA Power, Frenell GmbH, Archimede Solar Energy, Abengoa Solar, S.A., Baysolar CSP, Esolar, Inc., TSK Flagsol Engineering GmbH, Torresol Energy, Brightsource Energy, Inc., Cobra Energia, General Electric, Siemens AG, Soltigua, GlassPoint Solar, Solarreserve, LLC, Nexans, Aalborg CSP A/S., Chiyoda Corporation, and Novatec Solar.
The UK’s Feed-in Tariff (FiT) scheme for small-scale renewable arrays closed on 1 April 2019, much to the disappointment of key green campaign groups and solar industry figures. But, in the 12 months that followed, how has the market responded?
In total, 6.2GW of installed capacity was supported by Feed-in Tariff (FiT) between the scheme’s launch in 2010 and closure in 2019.
Launched in 2010, the Feed-in Tariff (FiT) scheme provided payments to owners of small-scale renewable generators at a fixed rate per unit of electricity produced, enabling the cost of installation to be recouped.
It was applicable to all forms of renewable generation ,but its impact was ultimately most felt in the solar sector. In January 2010, just 100MW of solar photovoltaic (PV) capacity was deployed across the UK. By the end of 2017, the cumulative total was 12.7GW, of which 4.8GW was supported by FiTs. By March 31 2019 – the final day of FiTs – the cumulative total of installed capacity supported by the scheme was 6.2GW.
Even in its final weeks of operation, the scheme was growing in popularity, according to official figures from the Department for Business, Energy and Industrial Strategy (BEIS). The Department recorded a 3% year-on-year increase in capacity installed between March 2018 and March 2019, or a 4% rise in total installation numbers.
The Government’s decision to close the Feed-in Tariff (FiT) scheme was, therefore, unsurprisingly criticised by key figures and organisations across the UK’s green economy.
Shortly before the closure, Green Alliance warned that the move would affect 30 community solar projects totalling 4 MW, and a further 77 private and public sector renewables projects, totalling 32 MW of solar and 21 MW of wind.
Separate research from SolarPowerEurope revealed that the impact of the decision was being felt long before the final closure of the scheme itself, with installation numbers halving in 2017, then again in 2017. Even before the decision on FiTs was taken, the UK Government had introduced a string of subsidy changes which collectively saw financial aid for solar arrays of all sizes slashed by 65%. Most notable was the closure of the Renewables Obligation (RO) initiative.
A bounce-back on the horizon?
It is worth noting that, given that subsidy changes relating to commercial and industrial-scale PV were made before the FiT closure, the market has had longer to react and stabilise in a new financial context.
EY ranked the UK seventh in its May 2018 Renewable Energy Country Attractiveness Index (RECAI), up from tenth in the previous iteration of the bi-annual ranking. The consultancy broadly attributed this improvement to the investment landscape settling as the market adapted to the RO closure and preparations for the FiT closure progressed.
Stabilisation – or even positive change – in the wake of the FiT closure is likely to take a little longer to materialise. BEIS’s latest statistics show that 43% fewer small-scale PV installations were made across the UK in February 2020 than in February 2019 – a trend the department attributes almost entirely to the FiT closure.
This is despite the introduction of the Smart Export Guarantee (SEG), designed by BEIS to ensure that businesses and residents creating and exporting solar electricity to the grid will be guaranteed payments. Unlike with FiTs, the SEG payment comes from energy suppliers rather than central Government. This, according to the Energy Saving Trust, leaves homeowners and businesses at the mercy of the market in regards to how long payments last and how much they will be, with different suppliers having different offers and some having failed to outline SEG procedures before the scheme was introduced last summer.
Since the introduction of the SEG, industry bodies such as the Renewable Energy Association (REA) and Solar Trade Association (STA) have been calling for a fair minimum price for generators and a minimum contract length. Measures undertaken to date by the central Government and by regulator Ofgem have not yet resulted in the creation of such sureties.
A way forward
It is worth noting that the STA has long accused BEIS of producing poor data on solar installations; the Association claims the Department has continued to exclude subsidy-free arrays from its calculations even after the changes to the RO and FiTs.
With this in mind, BEIS’s 43% year-on-year drop, detailed above, may not be as steep as it first seems.
The STA’s data shows that residential solar sales have broadly held steady over the last 12 months – due to a combination of the SEG’s launch; the UK’s legislating for a 2050 net-zero target; increasing public interest in climate change, off the back of improved scientific research and growing protest movements; and higher energy standards being introduced for new builds by several local authorities in Scotland. On the latter, Scotland’s net-zero deadline is notably five years ahead of the broader UK ambition, with several key cities having set more ambitious deadlines still (Glasgow’s is in 2030, as is Edinburgh’s).
BEIS has said it is “reviewing data sources to improve coverage”.
In the absence of Government data on overall installations, what can be assessed are PV technology costs. The IEA estimates that solar power costs, having already plummeted in most markets since 2010, will fall by a further 15% to 35% by 2024, spurring further growth over the second half of the decade.
Taking standalone, small-scale installations in the UK specifically, research from consultancy EVORA concluded that a 50kw PV system – including design, structural engineers report, mechanical and electrical (M&E) support and the installation itself – cost an average of £40,000 in 2019, down from £65,000 in 2015. Projects of this size typically generate an annual investment rate of return (IRR) of 12% and have a 35-year lifespan, the research concluded.
These considerations, regardless of the number of other installations, will doubtless prove attractive to businesses, homeowners and investors. Moreover, the fact that swinging tariff rates resulting from FiTs have now been out of the picture, businesses can calculate financial returns with “more confidence”, according to Gloucestershire-based PV firm MyPower.
These trends are likely to materialise in the coming years. A recent study by Centrica concluded that one-quarter of UK businesses without onsite generation are planning to install capacity before 2025, while 80% of businesses with onsite arrays are keen to increase capacity within the same timeframe.
With this calmer policy landscape, the only blip on the road for the deployment of small-scale solar in the UK now would seem to be the coronavirus outbreak. Bloomberg NEF analysis published this month states that global solar demand could be 16% lower this year than previously forecast, due to the sector’s reliance on production in China and the likely impact of social distancing measures on installers.
“Until the Covid 19 outbreak, the STA had been forecasting growth in unsubsidised large scale solar and commercial rooftops in 2020, clearly these projects will now suffer from delays and it is too early to tell the extent of this,” an STA spokesperson told edie, regarding the likely UK-specific impact.
Once the pandemic is overcome, however, the market for renewables in the UK is likely to re-gather momentum, as shorter-term policy measures are developed and implemented to bolster the long-term net-zero target. Meeting the UK’s target, the CCC has repeatedly concluded, will require renewable energy generation capacity to quadruple within 30 years.