DECC Confirms Solar Subsidies Will Be Cut By More Than Half

After weeks of rumours and uncertainty, earlier today the Government confirmed the inevitable – solar subsidies will be cut from 43.3p/kWh down to 21p/kWh.

This morning the Department of Energy and Climate Change (DECC) issued an official press statement and the news, although not unexpected, has set the solar industry in a bit of a spin.

Although the proposals are subject to the usual consultation, as part of the successful feed-in tariff (Fit) scheme that was introduced in April 2010, a new tariff is set to be introduced, which will see solar PV systems paid 21p for every Kilowatt hour of electricity they generate.

These new levels will apply to all new solar PV systems that are fitted on or after 12 December 2011. Although they will still be eligible to receive the current tariff rates up until 1 April 2012, the new lower rates will kick into force from then onwards.

Apparently, to prevent a boom and bust scenario from occurring in the solar industry, introducing lower tariff levels is an essential move in order to keep the feed-in tariff budget under control.  According to Energy Minister Greg Barker, the new tariff levels will help put the solar industry on a “steadier and sustainable growth path.”

Barker said that it was a priority to put solar on a firm footing, which would ensure prosperity in the industry.

“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year,” he said.

The official statement can be read in its entirety by visiting the Department of Energy and Climate Change website.

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