Solar power subsidy rates halved in new review

Government support for solar photovoltaic installations is set for heavy cuts under a Department of Energy and Climate Change (DECC) review launched today.

Solar: subsidies for smallest schemes could be halved
Solar: subsidies for smallest schemes could be halved

Energy minister Greg Barker said reduced rates for solar power under the Feed-in-Tariff (FiT) scheme, which guarantees a fixed price for each unit of electricity fed into the national grid from green energy equipment, are justified by the need to keep costs under control.

Under the proposals, FiT rates for the smallest schemes – those with a capacity of less than 4kW – would be more than halved, from 43.3 to 21p per kilowatt-hour. Larger devices up to 250kW would also see rates reduced.

Installations larger than 250kW would be unaffected by the proposals, following major cuts in FiT rates in August following the government’s fast-track review of subsidies for commercial-scale solar farms.

DECC is also proposing that beyond next April, properties would need to reach a specified level of energy efficiency to benefit from tariffs. The review will also consider whether more can be done to encourage genuinely community-based solar power projects.

"My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust," said Barker.

"Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year."

According to DECC calculations, solar photovoltaics subsidies would be costing consumers £980 million a year by 2014-15 unless action is taken. The government’s aim is to peg FiT costs in the sector at between £250 million and £280 million by then.

The proposals are out for consultation until 23 December. However, the government proposes that the rates cuts would be backdated, meaning that they would apply to any installation installed after 12 December.

The consultation document can be read here.

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