Support for new large scale solar farms under the existing "renewables obligation" could be stopped from April next year

Subsidy cut for solar farms criticised

Proposed changes to subsidies for solar farms threaten to stifle investment and knock back progress towards price parity, according to industry experts.

Support for new large scale solar farms under the existing "renewables obligation" would be stopped from April next year, two years before it ends for other renewable technologies, as part of proposals published for consultation today by the Department of Energy and Climate Change (Decc).

Ministers said the move was necessary because the solar farm sector has been growing faster than expected and without changes, more solar could be deployed than is affordable under the system of subsidies for renewables, which are paid for from consumer energy bills.

The Government says it wants to focus its support towards deploying more solar panels on the top of industrial and public sector buildings, which it says provides benefits such as more jobs and lower energy loss than solar farms covering fields or other areas of ground.

A Decc spokesman said: "Solar photovoltaics is an integral part of the UK's energy mix and we want to see this success story continue. Our recent Solar Strategy will ensure we remain a leading destination for investment and deployment of solar energy.

"As renewable technology matures and costs come down it is right those savings are passed on to consumers. Our ultimate goal is for renewables to be competitive with other forms of electricity generation and we will balance government support with the need to provide value for money to consumers and bring on essential new investment."

But the solar industry and environmental groups accused the Government of singling out solar farms for unfair treatment and of threatening jobs and investment in renewables by creating new uncertainty with policy changes.

The amount of solar farms currently installed would make up just 5 per cent of next year's subsidy budget, according to the Solar Trade Association (STA), which said that before the proposed changes solar had been on track to be the cheapest source of low-carbon power by 2018.

Under proposals for the new system of support, renewable power developers will have to bid against each for subsidies in auctions, which would disadvantage smaller businesses such as solar companies, the STA said.

STA chief executive Paul Barwell said: "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.

"The industry will be alarmed by these proposals and surprised to be singled out for harsh treatment. It does look like the Government is seeking to define the energy mix and hiding behind the false excuse of 'budget management'.

"If these proposals go through they will knock the industry's extraordinary progress back, and actually reduce healthy competition in the renewables sector."

The move to curb solar farm development comes just weeks after the announcement that the Tories would scrap subsidies for onshore wind farms if elected in 2015.

Recent research for Decc found that 85 per cent of people supported solar developments and 70 per cent backed onshore wind, while fracking for shale gas – which is supported by senior ministers – garnered just 29 per cent support from the public.

"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,” said Friends of the Earth Energy Campaigner Alasdair Cameron.

"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. UK renewables should be the cornerstone of future UK energy policy – not fracking. But yet again the Government has totally underestimated its potential."

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