The UK yesterday reduced financial support for domestic-scale solar power by less than expected, but went ahead with other cost-saving measures on renewables subsidies.
The government cut the tariff for domestic-scale solar up to 10 kilowatts (kW) in capacity, such as rooftop solar photovoltaic (PV) installations, to £0.0439 per kilowatt hour (kWh), it said in a statement.
Under the Feed-in-Tariff scheme, households, businesses or farms which install low-carbon energy sources such as solar panels or small wind turbines are paid for the electricity they generate and unused energy can be sold to electricity suppliers.
Solar firms had been expecting a much steeper cut to £0.0163 per KWh, which was proposed in a government consultation earlier this year.
The companies said a cut of that magnitude would scare off investors and argued that a gradual decline in the subsidies would be better for the industry.
Under the old tariffs, solar power up to 4kW in capacity was paid at £0.01247 per kWh and for 4 to 50kW it was £0.01130.
The government yesterday also capped spending on the Feed-in-Tariff scheme at a maximum £100 million (US$149 million) a year for new installations from February next year to April 2019.
The scheme was introduced in 2010 to encourage the deployment of renewable energy in the UK.
As expected, the government confirmed it would close another of its subsidy schemes, the so-called Renewable Obligation, two years earlier than planned to new solar PV capacity of 5 megawatts and below from next April.
It said it would introduce a “grace period” for those developers who made financial commitments on or before July 22 this year and those who experience delays beyond their control in connecting to the electricity grid.
“We have to get the balance right and I am clear that subsidies should be temporary, not part of a permanent business model. When the costs of technologies come down, so should the consumer-funded support,” British Secretary of State for Energy and Climate Change Amber Rudd said.
Britain’s Conservative government has been reining in spending on all renewables subsidies since it took power in May.
Figures published by the British Department of Energy and Climate Change showed the cost of the subsidies could reach ¥9.1 billion a year by the 2020-2021 tax year compared with a proposed budget of ¥7.6 billion.
The announcements are expected to reduce overspend by £500 million to £600 million, the government said.
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