Octopus has closed a last-minute funding deal to build 11 solar power plants ahead of a government subsidy being pulled in two days.
The project will be undertaken in conjunction with Lightsource Renewable Energy, which will develop the sites throughout England. The investment has funded the installation of 118,000 solar panels, with a total rated capacity of 30MW, producing enough energy to power 7,400 homes a year.
Paul Latham of Octopus Investments said: “When the deadline for FITs qualification was brought forward, it posed some significant challenges and there was a lot of gloom amongst funders and developers. We held our nerve – it shows Octopus have the capability to raise the funds and deliver successfully.”
The index-linked feed-in tariff provides a 25-year subsidy. It is designed to encourage the development of solar power plants and reduce the exposure of the UK economy to oil price shocks, which caused the 1970s recessions and may have contributed to the 2008 financial crisis.
The tariff has driven a 18-fold leap in solar power capacity since last year, but many observers are predicting a sharp fall in future investment once the subsidies expire.
Regardless, solar power has become more economically viable over the last few years, primarily on the back of rising oil prices. This has been caused by supply constraints from the Arab spring and increasing Asian demand.
However, the cost of polysilicon, the main material used in the manufacture of solar panels, has also fallen by 90 per cent since 2008, on the back of a 300x increase in Chinese output. Officials report that Chinese output will surge even further from 20,000 to 100,000 tons over the next few years on pipeline projects.
On the downside, solar power provides only seasonal revenue, and produces little energy during peak winter demand.