Solar farmers are in danger of going bust if they don’t meet a March deadline.
Insolvency specialists McTear Williams & Wood, reckon around 100MW of capacity is likely to miss the Government’s subsidy deadline which will lead to multiple business failures. This follows the government’s decision to close the Renewables Obligation scheme (RO) to new solar PV capacity above 5MW from April 1 and replace it with the new Contracts for Difference (CfD) auction regime where there is no guarantee of subsidy for newly connected projects.
Also under the CfD regime it is forecast that capital values will fall by up to 20%.
“The immediate effect of this change was a scramble among developers to build and energise as many new projects as possible before the end of March with over half of this activity in the East of England,” MWW says.
“Under capitalised developers of partly constructed projects above 5MW which cannot be energised by this date are likely to be in some financial difficulty as until they have a committed CfD subsidy no investor will be interested at a sensible price.”
Andrew McTear adds: “Over the past couple of years we have seen several high profile failures with developers unable to complete projects ahead of scheduled subsidy reductions. That has triggered onerous penalties which have driven some into insolvency. This time it is likely to be a lot worse.
"We expect there will be a number of players in difficulty in the run up to the March deadline. Many developers seem to have been over-ambitious in what they can deliver and face onerous penalties for failure. But the good news is that we have identified new sources of finance to help salvage distressed projects. Our advice to developers and suppliers concerned about solar farms missing the deadline is to make early contact with the specialists who can help.”
4 March 2015