UK renewables ‘tripped at the last hurdle’ by subsidy cuts

Moves to slash renewable energy incentives will have a "drastic impact" on the UK's low-carbon future and increase the 'boom or bust' potential of key funding mechanisms, warns a joint trade association letter sent to the Government.

The letter, signed by seven industry bodies including the Renewable Energy Association (REA) and Solar Trade Association (STA), expresses “deep concerns” – supported by newly released data – over the recently announced plans to cut the the feed-in tariff (FiT) scheme by up to 87%.  

The subsidy cuts will results in a loss of up £94m in lost tax revenue and additional welfare payments while also cutting 15,000 jobs, the organisations claim. 

REA senior policy analyst Frank Gordon said: “Not only do the Government proposals risk a damaging boom-or-bust scenario which might see the scheme shut early, but they also damage the prospects for energy storage, which ministers have said they support.

“Storage and renewables together will aid local communities to make independent decisions around their energy supplies and save money. Cutting government support now jeopardises this innovative future.”

Key concerns

The letter – also signed by the Anaerobic Digestion and Bio-resources Association (ADBA), British Hydropower Association, Community Energy England, RenewablesUK and Scottish Renewables – highlights three key concerns that could affect organisations currently developing projects which are supported by the FiT scheme.

The new proposals will drastically cap the amount of domestic rooftop installations allowed, due to a lack of economic investment at the proposed tariff rates, it states.

The proposals will also make it extremely difficult for investors to commit to new installations because of the introduction of budget caps. The REA claims that, if the caps are implemented, developers would have to build projects before applying, at the risk that they are unsuccessful in securing FiT support. This was confirmed last week when the Department for Energy and Climate Change (DECC) announced plans to axe renewable feed-in tariff pre-accreditation.

The letter also labels the threat of closing the FiT to new entrants in January 2016 as “unfair”, citing successful deployment of the Feed-in-Tariff and falling solar costs as reasons why removing the scheme would be counter-productive in satisfying arbitrary budget caps.

Initial Response to FiT Review- Joint UK Trade Associations

The REA and STA agree with the overall intention the UK solar industry should be able to function without government support. Earlier this year, a joint report between REA and KPMG indicated that solar installations could reach grid parity before 2020, but the lack of support under the FiT could hinder that progress.

Winds of change

The reaction to the FiT review has been published on the same day that new forecasts from the European Wind Energy Association (EWEA) reveal that wind power will meet a quarter of Europe’s electricity demand by 2030 – but only if Member States continue with their climate pledges.  

Over the next 15 years, EWEA expects wind power installations in Europe to reach 320GW of capacity, which could serve 24.4% of electricity demand across the region. However the latest announcements from DECC put the UK in danger of missing out on energy potential.

Earlier this week, the Renewable Energy Country Attractiveness Index (RECAI) found that the Government’s renewable energy subsidy cuts had seen the UK fall out of the top 10 for renewable energy markets.

Matt Mace

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