Onshore, Project Development, Solar, Utility Scale

UK Reduces Solar Subsidies Less Than Proposed After Appeal

The U.K. said it will cut solar subsidies by less than previously proposed after the industry shed thousands of jobs and appealed for less draconian measures to wean developers off government support.

So-called feed-in tariffs for the smallest domestic photovoltaic panels will be slashed by 65 percent, the Department of Energy and Climate Change said Thursday in a regulatory statement. That compares to its August proposals for a reduction of 87 percent. Rates for systems larger than 250 kW were given a bigger cut than previously proposed, while all rates for smaller systems were given smaller reductions. The new rates will apply from January.

The government is trying to keep a lid on subsidies for renewables that it says risk becoming a burden on consumers. Energy Secretary Amber Rudd has reined in assistance to solar, onshore wind, biomass and energy efficiency since she was appointed in May. The Office of Budget Responsibility, which advises the government, estimates spending on renewable-energy assistance programs will exceed Treasury caps by about a fifth by 2021.

“Subsidies should be temporary, not part of a permanent business model,” Rudd said in a statement. “When the cost of technologies come down, so should the consumer-funded support.”

The Department also on Thursday proposed caps on installations of 84 MW to 107 MW a quarter through March 2019. That allows more development than the 41 MW to 48 MW proposed in August.

The Solar Trade Association had warned that the limits on installations risked creating a “stop-start market” that left companies uncertain about their future. The industry lobby group estimates that 6,500 jobs have already been lost in the industry since the general election in May, when Conservatives ousted renewable friendly Liberal Democrats from the governing coalition. The group has said another 20,000 positions are at risk. 

The STA had proposed a set of milder tariff cuts that would allow 2.7 GW of installations from 2016 through 2019, as opposed to the 600 MW under the government’s plan. The group said its plan would cost consumers 1.09 pounds ($1.64) in 2019.

©2015 Bloomberg News

Lead image: London. Credit: Andrzej Kubik / Shutterstock.com