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UK solar approaching grid parity, says REA/ KPMG

Tom Edwards Senior Modelling Consultant

Domestic and commercial solar photovoltaics (PV) will begin to reach grid parity in the UK within the next five years, according to an industry report published on 23 July. The study, UK Solar beyond Subsidy: The Transition, was prepared by the Renewable Energy Association (REA) and KPMG. It said that the capacity of the technology in the UK was already increasingly rapidly, with 8.1GW deployed and capacity expected to reach 11GW by the end of next year. This was based on fast cost reductions within the sector: levelised costs have fallen by nearly 70% over the past five years, and are expected to fall by a further 35% over the next five (see table below for current LCOE estimates). To assess the potential cost of solar PV within the Levy Control Framework over the next five years, the report modelled two scenarios for deployment in 2020-21: a 20GW scenario and a 14GW scenario. Under current subsidies, 14GW would cost £130mn/ year, and 20GW would require £340mn/ year. However, in the higher deployment scenario, subsidy costs per gigawatt were less than three times those in the 14GW scenario. This is explained by the faster rate of tariff reduction in the 20GW scenario. KMPG said ...

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