In a blow to the renewable energy sector, the UK government is planning to impose massive cuts to a financial assistance program for clean energy projects including wind and solar.
The Department of Energy and Climate Change plans to reduce the so-called feed-in tariffs for wind-energy projects with capacities of between 100 kilowatts and 500kW to 4.52p/ per kilowatt-hour from 10.85p/kWh. The tariffs for projects between 500kW and 1.5 megawatts in capacity will fall from 5.89p to 4.52p. There will be no assistance for projects beyond 1.5MW.
The feed-in tariffs for solar farm with capacities ranging from 2.5kW to 1MW will be reduced from 5.94p/kWh to 2.28p, while installations above 1MW will be cut to 1.03p. The DECC also plans to cut the tariff assistance for hydro projects with 2MW and above of capacities, seeing the drop from 2.43p to 2.18p and installations between 500kW and 2MW declining from 8.91p to 6.56p.
The DECC said that if cost control measures are not implemented “the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2016”. It proposes to impose the new tariffs through 2018-19, when they will be reviewed, with removal altogether not ruled out.
“This is the uppermost level that we currently consider to be affordable within the context of higher than expected spend on the LCF and given that the FITs scheme has either achieved for wind, anaerobic digestion and hydro, or is close to achieving for solar PV, projected deployment,” said DECC.
The proposed cuts were slammed by the Solar Trade Association, which said they have shocked the industry.
“We don’t agree with these self-defeating proposals and will be urging DECC to take up our alternative,” said Mike Landy, Head of Policy at the Solar Trade Association. “A sudden cut combined with the threat of scheme closure is a particularly bad idea – it will create a huge boom and bust that is not only very damaging to solar businesses and jobs but does nothing to help budget constraints.
“We really are astonished at how self-defeating these proposals are. Instead, we are calling on the Government to work with the solar industry to deliver our plan for a stable glide path to subsidy-free solar.”
Another industry association, RenewableUK also expressed its disappointment. “It’s important that we all work to manage costs, but it looks as if the long term vision has been lost,” said its Deputy Chief Executive, Maf Smith.
“The small and medium wind sectors are at one with government in their desire to cut carbon at lowest cost to the consumer. But they can’t do this when government makes sudden and damaging changes which undermine investment.
“What we needed in this review was a clear vision for how we get to a point where cost effective, small-scale renewables are common-place, with all homes and businesses able to be part of a productive, vibrant low carbon economy. This review is not about how we build that prosperous future but simply about short term politics and accounting.”