UK government's solar subsidy cuts criticised

• 12 years ago (2011-12-23)
• Junior Isles

Europe 1061 Renewables 752

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The UK government's planned changes to solar power subsidies may deal the industry a "fatal blow", two separate parliamentary committees have warned.

The Environmental Audit Committee and Energy and Climate Change Committee have accused ministers of making necessary changes “clumsily”, at great cost to the solar industry.

UK government plans include restricting access to solar subsidies to houses meeting energy efficiency standards, among other measures, and thousands of solar industry jobs are under threat, the committees warn. Only this week, a group of companies and environmental groups won a legal judgement against one of the proposed changes.

Central to their campaign was the Department of Energy and Climate Change's (DECC) plan to abruptly halve the feed-in tariff (FIT) that small-scale solar installations attract, from 43p per kWh to 21p. The FIT is paid by energy companies to householders and communities to subsidise solar electricity generation. Without it many community and local projects would not be viable.

“This [proposed change] will have a devastating effect on hundreds of solar companies and small building firms installing these panels across the country,” said Joan Walley MP.

The High Court ruled that changing the tariffs before the end of an official consultation period was “legally flawed”. The two committees affirmed ministers were right to cut the tariffs, but not in the way they did.

“Ministers should have spotted the solar 'gold rush' much earlier. That way subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry,” said Tim Yeo, chairman of the Energy and Climate Change committee.

Subsidised solar panels have proved far more popular than the government anticipated when it introduced the FIT in April last year. As a result, about 90 per cent of the funds allocated to the four-year FIT programme have already been spent.

The government's other proposals include changing the criteria for eligibility for FIT to ensure homes are properly insulated before they install expensive solar panels.

“The government is right to encourage people to focus on saving energy before fitting solar panels, but these proposals will require most households to spend thousands of pounds on extra insulation before they even purchase the panels,” said Joan Walley, chair of the Environmental Audit Committee.

“"This will stop nine out of 10 installations from going ahead, which will have a devastating effect on hundreds of solar companies and small building firms installing these panels across the country."”

The Solar Trade Association, which represents more than 450 companies in the field, has surveyed industry chiefs and estimates that a third of companies could close as a result of the proposed changes.

A DECC spokesman said to the BBC that the report would be considered fully, but reasserted that the changes were needed.