U.K. Solar Industry 'Strangled At Birth'

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. government has proposed slashing its feed-in tariff for large solar power projects up to 70%, sparking fury among solar energy companies, investors and industry bodies. The drastic cuts will apply to any solar development of more than 50 kilowatts (kW) and, after a period of consultation, will go into effect August 1.

A review of solar panel subsidies was originally planned for 2013. The new coalition government argued that the cuts will bring solar power payments into line with the level of solar subsidies currently available in countries like Spain and Germany. It claimed the cuts for larger solar projects will protect the financial support available for solar power in homes, communities and small businesses. However, one solar industry spokesman said the industry had been 'strangled at birth.'

The cuts come as the European solar sector predicts a significant slowdown this year and beyond due to government cutbacks. For related news, see March 3, 2011, article - European Solar Power Market Faces Tough Times.

As it stands, from April 1, a solar energy project could expect 32.9 pence per kilowatt-hour (p/kWh) for 10-kW to 100-kW projects, and 30.7 p/kWh for 100 kW to 5-megawatt (MW) projects. However, the revised feed-in tariff will now offer 19 p/kWh for 50-kW to 150-kW projects; 15 p/kWh for 150-kW to 250-kW projects; and just 8.5 p/kWh for projects ranging from 250 kW to 5 MW , as well as stand-alone installations. The cuts range from almost 40% to just more than 70%.

"I want to make sure that we capture the benefits of fast-falling costs in solar technology to allow even more homes to benefit from feed-in tariffs, rather than see that money go in bumper profits to a small number of big investors," said Greg Barker, Climate Change Minister for the U.K.

"These proposals aim to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The feed-in tariffs scheme was never designed to be a profit generator for big business and financiers. Britain's solar industry is a vital part of our renewables future and our growing green economy. The new tariff rates we're putting forward today for consultation will provide a level of support for all solar PV, and ensure a sustained growth path for industry."

The reaction from the solar and renewable energy industry has been one of shock and outrage.

Gaynor Hartnell, Chief Executive of the Renewable Energy Association (REA), argued: "Larger PV projects are cheaper and have a major role in driving down costs. We don't want boom and bust in this sector either, but pulling the rug out from under the feet of those that have ventured into this market was precisely the wrong response. The U.K. will return to the solar slow-lane. It's as good as a retrospective change, and that does untold damage to investor confidence. It's not acceptable and we will fight it."

Ray Noble, the REA's PV specialist, added: "This is far worse than anticipated. This industry has been strangled at birth."

Howard Johns, Chairman of the Solar Trade Association, said: "The solar industry is one of the genuine good news stories in the U.K. today, providing jobs, a new green industry and, importantly, some hope. Crushing it at this time is a serious strategic mistake but inevitable when it appears to be Treasury, not DECC, dictating energy policy."

The U.K. is the latest European country to cut solar subsidies. In January last year, Germany's environmental minister proposed a 15% cut in feed-in tariffs for the solar power industry. For related news, see January 21, 2010, article -Germany Cuts Solar Subsidies By 15%. France has already introduced a 24% cut in solar feed-in tariffs for rooftop systems. For additional information, see January 17, 2010, article - France and Germany Cutting Solar Subsidies.

IIR's Renewable Energy Database provides extensive coverage on the wind energy, geothermal, hydroelectric, landfill gas-to-energy and utility-scale solar power plants throughout North America, and is now expanding coverage across the world.

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