The UK government has confirmed its decision to close an incentive program and cut feed-in tarrifs for solar projects.
The Renewables Obligation will stop from 1 April 2016 to all solar projects but will continue to be open to other technologies such as offshore wind, hydro and biomass until 2017. It was gradually being replaced with the Contracts for Difference auction system but currently no decision has been made on future auction rounds for ‘established’ technologies like solar.
This decision follows the government’s decision last year to close the Renewables Obligation for solar projects bigger than 5 megawatts in size.
“Closing the Renewables Obligation for solar is not in the interests of bill payers when solar is soon to become the cheapest low carbon energy source. Following the Paris agreement, this needs rethinking,” said Paul Barwell, CEO of the Solar Trade Association.
“Removing the grandfathering guarantee makes no sense for solar – it’s the thin end of the wedge. If you invest £1million of capital into a solar project today, in 20 years time you have still invested £1million – it is a sunk cost. You cannot have the level of support changing over the lifetime of a project as investors won’t take the risk.”
The government also is imposing a 64% cut to the feed-in tariff, below a 87% cut proposed earlier. Domestic solar installations up to 10kW in size will receive a FiT rate of 4.39p/kWh (US$0.065).
The new tariffs will come into force from 8 February, and the deadline for projects to receive the current higher tariffs is now 15 January.