Tories to slash solar subsidy budget by 98%
The Government's proposed cuts to the Feed-in Tariff subsidy scheme could leave the solar industry with just £7m of funding over the next three years - a 98% cut, according to new analysis.
At the end of August, the Department of Energy and Climate Change (DECC) launched a consultation on a set of measures to control the costs of the FIT subsidy. The proposals included strict deployment caps, early closure for new entrants and tariff cuts up to 87%.
The Solar Trade Association (STA) has since conducted a detailed analysis of the Government proposals and claims they will cut subsidy support from £70m a year currently to little more than £2m a year over the next three years.
“To put the £7m budget into context, that means that, over the next three years, 0.04% of the Levy Control Framework (LCF) budget is being spent on new solar projects” said an STA statement. “As another comparison, £7m is less than what Buckinghamshire County Council spends on potholes in a single year”.
The Government said it projects to go over the LCF budget by around £1.5bn by 2020, and the cuts were necessary to limit the impact on consumer energy bills. However, the STA has labelled the plans as ‘absurd’.
“This does not constitute a serious energy policy,” said STA chief executive Paul Barwell. "Solar can transform choice and competition in electricity markets, so the government’s short-term thinking on bills risks condemning hardworking families to a future of higher energy costs.
“This 98% cut in support is extreme and will decimate the nation’s most popular source of energy, and puts at risk over 20,000 solar jobs. The UK will be left behind if we turn our back on a global solar revolution.
“We have a plan to maintain a robust and growing solar industry and are keen to work with Government to find an effective solar policy that also delivers value for money. It is essential the Government rethinks its proposals – jobs and businesses are at risk.
“Given how close solar is to being subsidy-free – which these cuts will delay – giving this vital technology one last push is clearly in the interest of consumers. Currently Government is set to trip its solar revolution up at the last hurdle, which makes no sense at all.”
Over the summer, the new Conservative Government also prosed to scrap the Renewables Obligation subsidy for solar farms under 5MW and has ended pre-accreditation for the FIT, which comes into force today (1 October).
The decision to end pre-accreditation - which guaranteed developers financial support before they started generating - has also been heavily protested by renewables developers.
The Anaerobic Digestion and Bioresources Association (ADBA), Community Energy England, Regen SW, Renewable Energy Association, RenewableUK, Scottish Renewables and the STA have all signed a statement urging the Government to reconsider its recent decision.
Boom and bust
In the short-term, planning applications for solar farms have spiked as developers scramble to get their projects built before the cuts come into force, but industry experts warned that the boom will be short-lived.
Calls for Government to re-think its policies have been growing in number in recent weeks. The CBI said last week that the "roll-back of renewables policies” was sending a worrying signal to businesses, while the Committee on Climate Change warned that funding should not be withdrawn “too early”.
Energy UK, the body that represents energy utilities as well as other big businesses such as DuPont, has also called for the Government to “urgently reconsider” the proposals. The CEO of Shell recently said solar “will be the dominant backbone of our energy system”, while Al Gore said he was puzzled by the Government's low–carbon plan.