Cuts to Subsidies For Large Scale Solar Power Installations

In a long-awaited review of the feed-in tariff scheme, the Government has announced plans to drastically cut subsidies for large scale solar power installations.

Minister of State for Energy and Climate Change, David Barker said the Government had undertaken a wide-ranging review and consultation on the feed-in tariff (Fit) scheme, which was first introduced back in April 2010.

Funding remains available for households, as this is a move intended to increase the number of solar panels on house roofs, by favouring domestic and other small-scale installations of solar power. However he cuts will have a considerable effect on community-led projects, with many now unable to go ahead. Since subsidies on some schemes face being slashed by up to two-thirds, the returns on investments now being offered will simply be insufficient to attract financing.

Barker said the amounts devoted to feed-in tariffs needed to be changed because if larger scale installations received the same level of support as domestic scale installations, the system would become “overwhelmed”.

Therefore, come August, installations of solar power that are between 50 kilowatts and 150 kilowatts of capacity will receive 19p per kilowatt-hour produced, down from 32.9p. Larger installations of up to 250kw will receive a reduced tariff of 15p per kwh and field-size installations of between 250kw and 5 megwatts of capacity will get half that, at 8.5p per kwh. Both larger sizes were previously paid 30.7p per kwh.

The Department of Energy and Cimate Change has said the cut in tariffs was due to the potential cost to energy bill-payers. According to government calculations, a field-size system of 5 MW would reap subsidies of £1.3m per year. Twenty such schemes would receive subsidies equivalent to that of about 25,000 households.

The fact that large scale solar power subsidies face drastic cuts will come as a blow to community-led renewables projects, like the Wadebridge Renewable Energy Network. They planned to create “solar allotments”, which would see residents in the Cornish town generating a third of the community’s electricity needs by 2015. With an estimated income of up to £100,000 a year that would have paid for the installations, the remaining funds would have been re-invested into other local environmental schemes.

“It is extremely disappointing that the solar allotment scheme will inevitably collapse,” said Tony Faragher, one of the project’s volunteers. “The project will simply be non-viable with the proposed reduction in feed-in tariffs. We find it difficult to understand and accept this perspective.”

In Warwickshire, a locally formed group called Community Energy Warwickshire had plans to put in place 120 kilowatts (kW) of solar panels, spread over two hospitals. The group said the panels would have reduced the hospitals’ energy use, with the savings spent on patients. But the cuts now mean the project has been more than halved.

It’s a similar story across the country, with many other community schemes having to reevaluate their renewable energy plans, with the changes now making many of the schemes “economically unviable”.

Further consultation on feed-in tariffs will be launched later this summer, with more changes to the scheme set to take effect from April 2012.

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