Senseless and damaging: UK's solar cuts

| 22nd July 2015
Will all this come to an end now? Photo: Centre for Alternative Technology ( via Flickr (CC BY).
Will all this come to an end now? Photo: Centre for Alternative Technology ( via Flickr (CC BY).
The UK government has announced massive cuts in support for solar roofs and farms that appear designed to undermine investor confidence just as the technology is on track to be subsidy-free by 2020.
This proposed cut to support for solar is utterly short sighted. While the Government continues to subsidise fossil fuels and nuclear it's undermining investor confidence in clean, renewable energy generation.

The UK's energy department, DECC, has today published proposals to reduce support for solar on both roofs and in solar farms.

The proposals cover both the Renewables Obligation for bigger projects, and changes to rules on the Feed-in Tariff for smaller projects.

The Renewables Obligation, which supports rooftop and solar farm projects between 1MW and 5MW would be closed from 1st April 2016, alongside a planned reduction in levels of support for projects currently in the pipeline.

DECC is also proposing to end 'grandfathering' within the scheme from now on - the guarantee that a certain level of subsidy will be provided throughout the lifetime of a solar farm once built. This follows a similar move last year which already excluded solar farms of more than 5MW in size - about 25 acres - from receiving support from the scheme as of 1st April 2015.

With the Feed-in Tariff, which supports smaller scale rooftop and solar farms, the proposal is to remove 'pre-accreditation' - a lock-in to a fixed tariff level for six months, designed to give solar projects a window for financing and construction without the uncertainty of constantly reducing tariffs.

Attacking the UK's most popular form of energy

"There is no pledge in the Conservative manifesto about cutting support for solar, so we are disappointed by this move", said Leonie Greene of the Solar Trade Association. "Solar is the nation's most popular form of energy, as the government's own opinion polls have shown"

"This is damaging for big solar rooftops as well as solar farms, both very cost-effective ways of generating solar power. This contrasts with repeated commitments from Government to boost the commercial solar rooftop market.

"We also regret this move because solar farms are close to competitiveness with new gas generation and they account for a very small proportion of expenditure on the Renewables Obligation.

"Support for solar under the Renewables Obligation currently costs just £3 per year on each household bill, and solar makes up only 6% of the Renewables Obligation budget. There is a danger if Government pulls the rug on solar farms too early, the market will have nowhere to go."

The proposed removal of the 'pre-accreditation' system was "a real blow to investor confidence", she added. DECC itself says of the move: "It is likely ... that funding providers will apply higher discount rates to expected project cash flows, making funding more expensive."

But it insists: "Although we are aware that investors and lenders currently tend to require pre-accreditation before approving financial close, we do not consider that the lack of certainty over the tariff available upon completion will prevent projects being funded."

However another interpretation is that the move is deliberately designed to do exactly that: push up financing costs and so push previously fundable solar projects into unviability.

Undermining investor confidence

Caroline Lucas, the Green Party MP for Brighton Pavilion, commented: "This proposed cut to support for solar is utterly short sighted. While the Government continues to subsidise fossil fuels and nuclear it's undermining investor confidence in clean, renewable energy generation."

Keith Taylor, Green MEP for South East England, added: "Amber Rudd's incoherence in blindly supporting nuclear subsidies whilst cutting renewable funding is breathtaking.

"Nuclear has an expensive history the government seems incapable of learning lessons from, while renewables offer sustainable cleaner energy with thousands of jobs. In the face of our commitments to reduce carbon emissions and the forthcoming UN climate talks in Paris, these cuts are environmental vandalism of the first order."

Also opposing the move is Juliet Davenport chief executive of renewable electricity company Good Energy, which already owns six solar farms in the UK and supports over 90,000 people who generate electricity at home using small-scale solar.

"Ending support for solar power makes no sense at all. On one hand the government says it wants to keep household energy bills down by removing support for clean solar power, yet on the other promises massive subsidies to nuclear.

"The energy market currently has a wide range of subsidies and tax allowances in place, across all the technologies - renewables, nuclear and gas ... We'd like to see the government looking at all forms of support, not just renewables, and creating a more transparent and fair regime across the whole market."

Just as the UK is heading for solar 'grid parity'

Solar power met 15% of UK's energy demand on the afternoon of Friday 3 July. With continued support from the Government over the next five years, says Davenport, "solar would soon be one of the cheapest forms of electricity generation."

And contrary to government statements, she says it's already saving consumers money: "Our research shows that solar reduces wholesale prices by displacing high cost gas fired power generation during the day - the government is taking a one-sided approach by not taking this into account."

Last month the Solar Trade Association published its 'Solar Independence Plan for Britain' report, a fully costed proposal which sets out how the UK can double the amount of solar and get solar as cheap as fossil fuel electricity by 2020 - all for a modest amount of extra funds.

Its 'Higher Ambition' scenario would allow the delivery of 25GW of solar capacity by 2020, comprising over two million solar homes, 24,000 commercial rooftop and community schemes, and around 2,000 solar farms.

In 2020 the plan would provide 56,900 jobs at an average cost on consumer bills of just £13.35 per year. And even more important it would guarantee 'grid parity' in that same year - making that no new subsidies would bre required for any solar projects in the UK.


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