Plans to slash the subsidies available for electricity generated from rooftop solar panels by nearly 90 per cent have been criticised by the industry as short-sighted and self-defeating.
In the latest sign that the Conservatives are diluting their support for renewable energy after the exit of their Liberal Democrat coalition partners, the government said that the “feed-in tariffs”, which are paid to households that generate power from newly installed solar panels, would be cut from 12.9p per kilowatt hour now to 1.63p per kilowatt hour in January. The feed-in-tariff scheme began in 2010 to speed up the growth of smaller-scale solar and wind developments.
Under its terms, households and businesses that install solar panels or wind turbines are paid for the power they generate and can also sell unused electricity to the grid.
Mike Landy, head of policy at the Solar Trade Association, said that the cuts to subsidies were a bad idea that would lead to job losses and push some solar developers out of business.
“We really are astonished at how self-defeating these proposals are,” he said. “Instead we are calling on the government to work with the solar industry.” He added: “If the Department of Energy and Climate Change and Treasury insist on making such damaging and unjustified cuts, then they will need to develop alternative policy proposals to drive commercial sector deployment.
Advertisement
“The upcoming energy efficiency tax review provides exactly the opportunity to do so, but we need to see some positive proposals very quickly to mitigate the shattering of confidence across the solar industry.”
The decision to abolish the payouts made to new small-scale renewables installations next year is the latest blow to the renewable energy industry. In June, Amber Rudd, the energy secretary, announced cuts to the financial support available to developers of new onshore wind turbines — the cheapest form of renewable power available.
The announcements come after the chancellor asked government departments to draw up plans to cut 40 per cent from their budgets. Figures from the Department of Energy and Climate Change show that the cost of renewable energy subsidies could hit more than £9 billion per year by 2020, compared with a proposed budget of £7.6 billion.
David Pickup, from the Solar Trade Association, said that 670,000 UK households had taken advantage of the feed-in-tariff scheme by fitting solar panels on their roofs.
Yesterday the government expressed concerns about the rising costs. The energy department’s report said: “We propose ending generation tariffs for new applicants from January 2016 or, alternatively, further reducing the size of the scheme’s remaining budget available for the cap.”
Advertisement
The report proposed that the scheme should be restricted to a maximum budget of £75 million between 2016 and 2018.
One of Britain’s biggest engineering firms also criticised the government’s renewable energy policy.
Ian McHoul, the chief financial officer of Amec Foster Wheeler, a FTSE 100 engineering group, said that Britain’s strategy to support wind and solar power was muddled and was sending a negative message to businesses seeking to invest.
“The renewables strategy is ill-defined,” he said. “There is a clearer statement of intent on nuclear. But reducing subsidies [on green energy] is not healthy.”
Alasdair Cameron, from Friends of the Earth, described the cuts as absurd and said that they would “send UK energy policy massively in the wrong direction”.