Government reveals drastic changes to solar farm subsidies

Large-scale solar farms will no longer receive financial support through the Renewables Obligation (RO) scheme as of next April, under new proposals put forward by the Department for Energy and Climate Change (DECC) earlier today (13 May).

In a shock political U-turn, DECC this morning officially launched a review of solar subsidies, confirming plans to close the RO scheme to 5MW+ solar farm applications (scroll down for consultation document).

The industry is expected to switch to the new Contracts for Difference (CfD) scheme from next year, but industry experts are concerned by the replacement of the RO with CfDs. These proposals are highly complex and will greatly increase risks for smaller SME companies, which are prevalent in solar, compared to big utilities.

As reported throughout the past week by edie, the renewable energy industry is united in its opposing stance to today’s controversial announcement – especially as it comes in stark contrast to recent assurances from Energy Minister Michael Fallon that no further review of the RO scheme was planned. (Click here for full industry reaction)

But in today’s announcement, DECC claims it is concerned that large-scale solar farms would exceed their available budget under the RO scheme; highlighting that this move is intended to protect the Levy Control Framework, which sets the total budget for renewable power projects under Feed-in Tariffs (FITs), the RO and CfDs.

Support for solar

Opposing that view, the Solar Trade Association calculates that current solar capacity of 2.1GW would only cost the RO £160 million, or roughly 6.5% of last year’s RO budget (5% of next year’s RO/CfD budget). Even if large scale deployment is doubled to 4.2GW this year cumulatively, solar will make up £280 million or 9% of the 2014/15 RO/CfD budget, the STA argues.

This will be the third major review of PV support in as many years. The Government’s recent Solar Strategy confirmed its intention to move support in favour of roof-mounted solar. As such, the proposals will not affect Feed-in Tariffs (FITs) for household solar installations.

Solar has received widespread public support over recent years, with DECC’s own survey last year concluding that 85% of people are in favour the technology. But, as alluded to in the REA’s REview last week, there is a close link between clear, stable policies and the ability of renewable energy sectors to attract investment, create jobs, and grow the share of clean energy in UK.

View the full Government consultation on changes to financial support for solar PV below.

Luke Nicholls

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