Subsidy cuts confirmed for solar farms

The solar PV sector’s subsidy cut fears were confirmed on Tuesday as part of a raft of announcements on renewable policy.

In a move that will inhibit the growth of controversial solar farms, the Department of Energy and Climate Change (Decc) is closing the Renewable Obligation regime to projects over 5MW from 1 April 2015. Developers will instead be forced to compete for contracts for difference (CfDs) in the new regime.

For smaller-scale solar projects, feed-in tariff (FIT) rates will be cut faster for ground-mounted than roof-mounted panels.

Explaining the policy change, Decc said large-scale solar was deploying “much faster than we expected”. Industry projections show it exceeding the 4GW deemed “affordable” by 2017.

The Solar Trade Association (STA) criticised the proposals as an “own goal”, however, saying they would disrupt efforts to reduce costs in the industry.

Paul Barwell, chief executive of the STA, said: “The industry will be alarmed by these proposals and surprised to be singled out for harsh treatment. It does look like the Government is seeking to define the energy mix and hiding behind the false excuse of ‘budget management’.”

Decc also published details of the budget split for renewable CfDs.

Onshore wind, large-scale solar PV, energy from waste, mid-scale hydro and landfill and sewage gas were confirmed as “established” technologies. That means they will have to compete in auctions for subsidy from day one.

Offshore wind, marine, anaerobic digestion, dedicated biomass with CHP, geothermal and advanced conversion technologies are considered “less established”. Developers are expected to receive the administrative strike price at first before moving towards competition.

There will be enough budget reserved for wave and tidal stream projects to allow for a minimum deployment of 100MW.

Biomass conversions and Scottish island onshore wind projects are to be treated separately.

Biomass conversion “will be subject to immediate competition through a constrained allocation process if budget is available”. It is considered “established”, despite a limited number of completed projects. However, it is more expensive than other established technologies and Decc said it could reduce competitive pressure if entered into the same auction.

Decc is inviting views on whether to treat Scottish island onshore wind as “less established” or a separate grouping. These projects face higher costs than their mainland counterparts, due to the need for expensive new transmission links.