UK government pledges further solar subsidy cuts

The British government has threatened to derail the solar industry with big cuts to subsidies, it has been claimed, despite saying new plans are an “improvement”.

Solar subsidies are being reduced to around half the level of before a government consultation was launched last year, with a drop to 21p/kWh as of April this year.

In July, these could further drop to 13.6p/kWh, while the government stated its aim to change subsidies regularly in accordance with market pressure as part of new plans. It is hoped that this will remove the need for emergency reviews, which have seen the government dragged into court over its premature cuts.

“Today we are announcing plans to improve the Feed-in Tariffs scheme,” Barker said in a statement.

“Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.

“We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment.”

Energy Minister Greg Barker claimed that new plans would pave the way for a solar boom, with 22GW of installed capacity by 2020.

The optimism has not been shared throughout the solar industry.  Solar Trade Association boss Howard Johns said the plans would destroy the industry, labelling them a “disaster” on Twitter.

Solar industry analyst Ash Sharma at IMS Research also highlighted the negative effect cuts are likely to have, and doubted the ability to reach targets set forth by Barker.

“This seems very optimistic to me,” Sharma told TechEye. “Our best-case forecast shows cumulative installation capacity of less than 15GW by the end of 2020.

“Regardless, is 22GW really that much? That would still be less than what Germany had installed by the end of last year, but a step in the right direction.”

In fact, Sharma believes that the UK is set to fall further behind other leading solar nations with the subsidy cuts. “The UK will definitely play a much smaller role in the global industry in 2012 and beyond,” he told us.“I suspect we may well see a small boom in installations in the next month or so, followed by a real slowdown.”

“In the longer-term we’ll see some more gradual growth but I’m not sure we’ll see 22GW installed by 2020,” Sharma said.