The government is closing off subsidies for large solar farms two years earlier than expected in a move that the renewables industry says will be ‘crippling’.
The subsidy for solar farms of over five megawatts capacity will end from 1 April 2015.
Funding has been available under the Renewable Obligation Scheme, which has been so successful that the energy department says so many are being built so quickly that they could become unaffordable.
Large solar projects will still be eligible for subsidy under the new Contracts for Difference scheme that is designed to offer long term contracts for power generators. But solar will have to compete against other types of renewable energy technologies.
The UK solar power industry now generates around 2.7 gigawatts – enough to power 620,000 homes - compared to almost noting five years ago. The energy department says it expects the UK to have 10 to 12 gigawatts of solar capacity installed by 2020. The industry says it has cut its costs by 30% in the last two years and solar was on track to be the cheapest source of low carbon power by 2018.
Announcing the decision the Department of Energy and Climate Change said: “Large-scale solar is deploying much faster than we expected. Industry projections indicate that by 2017, there could be more solar deployed than is affordable.”
Subsidies for solar panels mounted on buildings will reduce at a slower rate, supporting policy revealed in the department’s Solar Strategy last month.
The energy department statement said the UK’s renewable electricity capacity has doubled since 2010 thanks to £34Bn of private sector investment, potentially supporting 37,000 engineering jobs.
The Solar Trade Association said the news comes as a ‘crippling blow’ to the future of an industry that has invested 12 months defining and disseminating good practice. A statement said: “The solar farm industry has also brought costs down by 30% over the past two years, and solar was on track to be the cheapest source of low carbon power by 2018.”
