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Government Cuts Solar Farm Subsidies

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Government Cuts Solar Farm Subsidies

Solar farms over 5MW will no longer receive Government funding

In the same month that the UK is reported to become the biggest European solar PV market, the Government announces cuts to subsidies for large-scale solar farms. From April 2015, installations over 5MW will no longer receive Government funding.

The move comes as a shock to some, with many claiming that these drastic cuts will create financial uncertainty within the solar industry. When the feed-in tariffs were slashed in 2012, it created a massive dip in the market, forcing many companies out of business. Among those opposed to the changes is Greenpeace UK’s chief scientist Dr Doug Parr who said:

“Solar is hugely popular in the UK, costs are falling faster than for any other energy source, and the latest technology is on track to beat nuclear on price. Sowing uncertainty for a key source of clean, homegrown energy, makes no economic, political, or strategic sense. Far from hitting the big energy companies this compulsive policy tinkering sucks confidence out of independent generation and leaves the future of community solar projects up in the air.”

However, the Government has said that while they are cutting support for solar farms, they will improve the support regime for rooftop installations and community-owned projects. Investing more in roof-top & commercial solar supports the Government’s Solar Strategy released by DECC last month.

In a country where land is sparse, it makes sense to exploit our unused rooftops. There is more than 250, 00 hectares of available South-facing roof space here in the UK, a huge potential for renewable energy generation. Refocusing efforts on roof-top solar allows businesses and homeowners to create a source of independent energy and could give the solar industry the boost it needs to become an independent and hugely profitable market.

Yet DECC are still to outline exactly how they intend to increase support for building-mounted solar. And with many obstacles making it difficult for business owners to invest in solar, they will need to invest structure as well as money into supporting rooftop installations and community-owned projects.

Industry Reactions

“This could potentially be beneficial for rooftop solar, providing the government redirects funds into these markets and they follow their strategy of distributed energy on domestic and commercial rooftops. This will empower people to take the opportunity to become solar generators themselves, giving small businesses and homeowners some level of energy security. However DECC are still to tell us how they intend to increase support.”

– Rajiv Bhatia, director, Alternergy

“The costs of solar power have kept on falling, in large part thanks to the growth and learning in our successful UK industry. We had forecast solar could be cheaper than onshore wind by 2018, but for this to happen we needed stable policy sustaining a high-volume market. The Government is actually moving to slow down solar’s cost reductions towards grid parity.

“DECC challenged us to work with communities to ensure solar remained popular as the large scale sector developed, and we’ve done just that. If these proposals go through they will knock the industry’s extraordinary progress back, and actually reduce healthy competition in the renewables sector.”

– Paul Barwell, CEO, STA

“Clear, stable policy attracts investment, creates jobs and drives growth and cost reductions in renewable energy technologies. However, there is not much clarity or stability on show today. The piecemeal approach to the CfD scheme leaves a lot of questions still unanswered… Without knowing what DECC intends to do in terms of setting out the budget, making sense of CfD proposals is like trying to complete a jigsaw puzzle without seeing the picture on the lid.

“Solar power meanwhile is subjected yet again to devastating instability. Government must ensure that policy drives and rewards technology cost reductions with a stable trajectory of gradually declining financial support, not the cliff edge the Government is proposing for solar.”

– Nina Skorupska, chief executive, Renewable Energy Association

“This review shows that the Government’s renewables strategy is in some disarray and struggling to catch up with developments.

“Every time a renewable energy technology starts to do well it gets hit by a wave of Government uncertainty, which pushes up costs and threatens jobs and investment.

“Attacking large-scale solar parks, while doing almost nothing to boost rooftop systems, is another sign of this Government’s piecemeal approach to policy making. Solar power is cheap, popular and essential for tackling climate change and energy security.”

– Alasdair Cameron, energy campaigner, Friends of the Earth

“Removing subsidies, as the Government is planning by closing the Renewable Obligation for projects over 5MW from next April, is never going to be painless and it will be scary times for those developers facing lower returns than they have calculated.

“But we have been saying for some time that solar, which is plummeting in cost, looks set to compete on its own two feet with fossil fuels. It looks like we will find out if this is the case sooner rather than later. The important thing is that the transition away from subsidies is done fairly.”

– Rebecca O’Connor, director, Trillion Fund

“The drastic reduction in the cost of solar technologies – by some industry estimates solar farm costs have fallen over 30 per cent in two years – coupled with the breakneck speed with which solar panels can be installed presents a unique challenge to policymakers. A challenge Whitehall is still yet to get to grips with.

“Ministers have a responsibility to retain a high degree of budget control, not least because the LCF is not a bottomless pit of money, it is paid for through the energy bills of households and businesses and as such excessive deployment of subsidised projects could and would lead to higher bills for the public.”

– James Murray, Business Green

“Despite the threat of RO support being removed completely in April 2015, the large-scale solar sector in UK is predicted to become Europe’s largest in 2014, with some analysts predicting that the planned ROC closure for >5MW could trigger as much as 4GW of solar farms to be installed from now until April 2015.”

– Solar Power Portal

Further Reading

Consultation on Changes to Financial Support for Solar PV –

DECC Unviels Shock Changes to Solar Farms Subsidies –

RO Support for Solar Over 5MW to be Scrapped in 2015 –

Solar Farms to Lose UK Government Financial Support –

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