Government to cut solar support rates by 25%
The Government has proposed cuts to subsidy rates for solar power installations that it claims will ensure stability, certainty and sustainability for the solar industry.
Under the proposal solar projects installed after April 1 2013 will be cut by 25%, from 2 Renewables Obligation Certificate's (ROCs) per megawatt hour (MWh) to 1.5 ROCs per MWh.
The new rates will bring the Renewables Obligation (RO) in line with the feed-in-tariff scheme supporting solar projects with smaller capacities.
The 1.5 ROC rate will then drop further to 1.3 ROCs in 2014, 1.1 ROCs in 2015 and 0.9 ROCs in 2016.
The Department of Energy and Climate Change's (DECC) consultation on the Renewables Obligation Banding Review (ROBR), published in October 2011, proposed maintaining support for solar PV at 2 ROCs per MWh until 31 March 2015.
Under the previous consultation the rate would then drop to 1.9 ROCs per MWh for new accreditations and additional capacity added from April 1 2015 to March 31 2016, and 1.8 ROCs per MWh from April 1 2016 to March 31 2017.
However, cuts to support rates were proposed last week after the Government suggested that the costs associated with the deployment of medium-large scale solar installations between 250kW and 5MW have fallen substantially since October 2011.
Responding to the proposals, Solar Trade Association's (STA) CEO, Paul Barwell, said: "We have delivered really exceptional cost reductions in the solar industry, yet we once again face having the rug pulled from under us. The proposed 25% cut is too big and too soon.
"We understand DECC have concerns about how solar will interact with other renewable technologies under the RO, and how it will influence the budget, but deliberately under-rewarding solar to curtail the industry is definitely not the solution. This is not a fair proposal and it is not in the public interest to constrain a cost-effective technology."
The STA said it was also dismayed to see the very low deployment projections using out of date information presented in the consultation.
Paul Barwell added: "We're perplexed as to why these old projections have been repeated in this consultation. Projections of a few megawatts, rather than gigawatts of solar obviously are not consistent with the hard-won ambitions for solar that DECC Ministers have clearly articulated."
The Government has launched an additional consultation on the proposed support rates with a deadline for responses by October 19 2012. The Government intends to implement changes to the solar PV support regime by March 31 2013.
The revised rates proposal comes days after the European Commission launched an anti-dumping investigation into imports of solar panels from China.
A recent complaint by an industry association claimed that solar panels and their key components imported from China enter the European market at prices below market value, prompting the investigation.
The complaint shows possible price dumping by the exporting producers on the EU market and a possible link between the imports and the damage suffered by the industry.