Subsidies for large-scale solar power installations are to be cut drastically, in a move that ministers said would preserve funds for households to put up panels, but industry warned would mean a slower uptake of renewable power.
The government said its long-awaited review of feed-in tariffs for renewable energy would divert funds from field-sized solar power plants to panels on house roofs.
But the renewable energy industry and green campaigners said the change of heart would mean community schemes, put forward by housing associations, schools and hospitals, would not go ahead.
Howard Johns, chairman of the Solar Trade Association, said the move would cripple the UK’s fledgling solar panel industry. “Crushing solar makes zero economic sense for UK plc because it will lose us major manufacturing opportunities, jobs and global competitiveness,” he said. “It also risks locking us in to more expensive energy options in future. It is inexplicable that the Treasury can be allowed to damage energy and industrial policy by taking decisions without taking into account the bigger picture.”
The reform, trailed in February but delayed by a consultation that was recently completed, will favour domestic and other small-scale installations of solar power, of up to 50kw – typically enough to cover several houses, or about two tennis courts according to the government, but not enough for some of the community-scale installations some developers had planned, which would cover fields.
As of the beginning of August, installations of solar power that are between 50 kilowatts and 150 kilowatts of capacity will receive 19p per kilowatt-hour produced, down from 32.9p. Larger installations of up to 250kw will receive a reduced tariff of 15p per kwh and field-size installations of between 250kw and 5 megwatts of capacity will get half that, at 8.5p per kwh. Both larger sizes were previously paid 30.7p per kwh.
Greg Barker, energy and climate change minister, said: “I want to drive an ambitious roll-out of new green energy technologies in homes, communities and small businesses and the Fit scheme has a vital part to play in building a more decentralised energy economy.”
But solar companies and renewable energy advocates said the changes would cut off solar projects that would benefit communities, and that the speed of the reforms – the feed-in tariffs were introduced last April, but the cuts were trailed by ministers in February, and next year will see further changes from another review – was creating an atmosphere of uncertainty that was scaring off investors and jeopardising manufacturing jobs.
Gaynor Hartnell, chief executive of the Renewable Energy Association, said: “The handling of this whole affair has been poor. Larger-scale PV has been demonised, when it is the most cost-effective approach.”
A group of solar companies are challenging the government’s decision in the high court.
Solar panel costs have come down dramatically: the industry expects that, even in the UK, solar power will be comparable to offshore wind energy by 2015.
The cost of the feed-in tariffs is met not from government funds but by energy companies adding small amounts to bills for all customers.
However, Barker said the amounts devoted to feed-in tariffs should be changed because if larger scale installations received the same level of support as domestic installations, the system would be “overwhelmed”.
Feed-in tariffs–introduced because of their success in countries such as Germany and Italy – began in April 2010. In the first year, more than 30,000 solar panel systems were installed, compared to a few hundred in previous years.
The government said the tariffs were cut because of the potential cost to energy bill-payers. According to government calculations, a field-size system of 5 MW would reap subsidies of £1.3m per year. Twenty such schemes would receive subsidies equivalent to that of about 25,000 households.
The rates of support for anaerobic digestion, used on farms, will be raised to 14p per kwh for installations under 250kw of capacity, falling to 13p for installations up to 500kw.