Government announces more solar subsidy cuts

From 1 July 2015, the subsidy rate for standalone ground-mounted solar projects will drop from 6.16p/kWh to 4.43p/kWh, sparking outrage from the solar industry over the government’s controversial tariff degression rules.

The rules, as they stand, mean that the feed-in tariff for ground-mounted solar projects is automatically cut if more than 17.5MW of ground-mounted solar farms are installed under the subsidy scheme in any one quarter of the year.

Latest government statistics reveal that 98.18MW of standalone capacity was installed under the feed-in tariff in the first quarter of 2015 – enough to trigger a 28% degression on April’s 6.16p/kWh subsidy rate for standalone solar systems.

So, from the third quarter of 2015, the feed-in tariff rates for ground-mounted solar projects will be cut as follows: –

– 0-10kW: 3.5% drop
– 10-50kW: (none) 
– 50kW-5MW roof: 3.5% drop
– Standalone: 28% drop

‘Hyper-degression’

Speaking on behalf of the solar industry, the Solar Trade Association’s chief executive Paul Barwell said: “A degression of 28% in the standalone band shows that we are now, as we predicted, entering the era of tariff hyper-degression.”

“The problem is that there will now be a big rush to meet the 1 July deadline to get the 6.16p tariff which is certain to in turn create another 28% cut in Q4.

“We at the STA have been warning for over a year that there is a real structural problem with the feed-in tariffs and a complete lack of capacity in the rooftop and ground mounted bands to allow for meaningful growth.

“The feed-in tariff is perfect for community-led schemes because it is a user-friendly support scheme. This degression will be a let-down for all the community groups that the solar industry has worked so hard to engage and attract to solar – and that the government has wanted us to engage.”

Split ownership

One consolation that DECC has offered is that the Department has now split the standalone and roof-mounted sectors, so that the tariffs for rooftop solar are not affected by this degression for ground-mounted solar. As of 1 April, two projects with a capacity up to 5MW each can share one grid connection point, as long as one of the sites is owned by a community organisation or charity.

The Renewable Energy Association’s senior policy advisor Ray Noble added: “The new Government should take note of what solar is capable of delivering, not only in terms of electricity but also in jobs. This is another step on the way of it being the cheapest form of electricity generation.” 

The potential degression will need to be confirmed by Ofgem when it releases its official statistics for deployment.

World industry

Earlier this week, Noble did concede that the price of using solar energy would continue to fall in the UK, even if all subsidies were removed.

Speaking at Sustainability Live on Wednesday, Noble said: “Nothing will stop solar now – even if a new government came in and said we are going to stop all subsidies tomorrow, the solar industry would continue on. It’s a world industry and nothing will stop the prices coming down and therefore people will be using it.”

“But the Government won’t be doing that, they only need to do another three or four years of support and then they will get all the credit for what will be the cheapest form of energy generation.”

Luke Nicholls