The UK government has confirmed it plans to remove support for solar projects over 5MW under the Renewables Obligation (RO) scheme two years earlier than expected, to stop costs soaring.
A consultation paper published by the Department of Energy and Climate Change (DECC) says the government “considers it necessary to take action to control the costs of large-scale solar PV to ensure it is affordable in the context of the RO and Electricity Market Reform”.
The scheme will be closed to new solar projects over 5MW from 1 April 2015.
“Large-scale solar is deploying much faster than we expected,” DECC says.
The government had expected 2.4-4GW of solar to be funded by the scheme by the end of the decade, but says current forecasts project more than 5GW by 2017.
“We need to manage our financial support schemes effectively and responsibly. That means we need to ensure that the growth of the solar sector is delivered in a way that gives best value for money to consumers and allows us to offer effective support to the renewables sector as a whole,” the department says.
Solar projects will still be able to apply for the new contracts for difference scheme, which gives renewables generators certainty of a minimum electricity price over 15 years.
However, this subsidy is likely to be harder to win, as the total amount available is capped and projects will be forced to compete with each other on cost to win the contracts.
A DECC spokeswoman tells Recharge, “As renewables 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 Renewable Energy Association says the changes "create more uncertainty and instability". Chief executive Nina Skorupska says: "Clear, stable policy attracts investment, creates jobs and drives growth and cost reductions in renewable-energy technologies. However, there is not much clarity or stability on show today.
“Solar power, meanwhile, is subjected yet again to devastating instability. Government must ensure that policy drives and rewards technology cost reductions with a stable trajectory of gradually declining financial support, not the cliff edge the government is proposing for solar.”
Greenpeace UK’s chief scientist, Doug Parr, says solar is hugely popular, costs are falling faster than for any other energy source, and the latest technology is on track to beat nuclear on price.
“Sowing uncertainty for a key source of clean, home-grown energy, as ministers are doing, makes no economic, political or strategic sense," he says.
“Far from hitting the big energy companies, this compulsive policy tinkering sucks confidence out of independent generation and leaves the future of community solar projects up in the air.
“The fracking industry makes wild claims about getting us off energy imports and gets everything it wants from government, even though it’s locally unpopular and production is a decade away. Instead, an industry like solar that enjoys strong public backing and is delivering electricity and jobs right now has to keep reacting to routine cycles of uncertainty and reviews.”