EU bullies Britain on solar subsidy reduction

The British government is under threat from the European Commission about its plans to cut Feed In Tariffs for photovoltaic panels by 50 percent. 

Günther Oettinger, the EU Energy Commissioner, is taking a rather hardline stance on the FiT cuts. He is keen Britain meets its 2020 targets as part of the EU to generate 15 percent of its energy from renewable sources by then.

According to the Independent, he said: “Whenever member states revise their support schemes for renewable energy, they need to do so in a manner which does not destabilise the renewable energy industry or risk undermining their plans to achieve their 2020 targets.”

Oettinger said that if the UK government deliberately weakens policies that will “threaten progress” to the targets, the EC will take action “launching legal proceedings if necessary”.

Though Oettinger talks about 2020 targets, he might not have 2020 vision. Actually, FiT reductions are very common – they shift and change to move with the ebb of demand. 

Speaking to TechEye, IMS Research senior market analyst Sam Wilkinson, from the PV Research Group, says 2011’s growth for photovoltaics in the UK market has been very good. In fact, it exceeded government plans.

“As such,” Wilkinson explains, “the current growth of the market is unsustainable, and due to the rapid price declines that we have seen over the last six months, the rates of return offered by the FiT are extremely high.”

In fact, the UK is en route to sit next to other countries where PV penetration is very high. “Although a 50 percent cut in the FiT rates sounds drastic,” said Wilkinson, “the proposed FiT rate of 21p per kWh for residential systems is quite comparable with Germany, the world’s largest and most developed market, where a small rooftop system will receive €0.24/kWh.”

It seems unlikely that the EC would have much luck in the courts by bringing the UK to book on what is, really, a success story.

Besides, Wilkinson adds, as with other countries that reduced their subsidies, the market will certainly slow, but “it will by no means disappear”.