DECC confirm changes to renewable subsidies with tariff cuts scaled back

DECC confirm changes to renewable subsidies with tariff cuts scaled back

A full review of the FiT scheme was undertaken in August, and following industry and public feedback the Government has revised tariffs for domestic solar generation to 4.39p/kWh. The move represents a 65% cut in subsidies to householders, from the existing 12.47p.

Author Ross Moffat

The Department for Energy and Climate Change (DECC) has confirmed changes to the Feed-in-Tariff (FiT) and Renewables Obligation (RO) subsidy schemes. New measures are designed to tackle a projected over-allocation of subsidies and a £1.5 billion overspend of the Levy Control Framework (LCF), in line with Conservative Government policy to ensure value for money for consumers.

A full review of the FiT scheme was undertaken in August, and following industry and public feedback the Government has revised tariffs for domestic solar generation to 4.39p/kWh. The move represents a 65% cut in subsidies to householders, from the existing 12.47p. However, Energy Secretary Amber Rudd, following criticism of earlier plans, has scaled back original plans to slash subsidies by 87%. The Government also announced plans to reintroduce pre-accreditation, which had been threatened with removal, for solar PV and wind generators over 50kW and all hydro and anaerobic digestion generation. Deployment caps will be introduced to limit new spending on the FiT system to £100m up to the end of 2018/19. The new plans are expected to reduce the LCF overspend by between £500-600m.

UK Energy Secretary Amber Rudd said: “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 cost of technologies come down, so should the consumer-funded support.”

However, the plans were criticised by environmental groups for halting investment in low carbon technology, days after a global climate deal was reached in Paris. Industry groups also expressed disappointment over the minor scale of the pullback, and highlighted the 6,500 jobs already lost in the sector due to the planned cuts.

Plans outlined for the RO scheme over the summer have not changed following this week’s announcement. The scheme will still close to new solar PV capacity under 5MW from 1 April 2016. The Government confirmed earlier intentions to review solar-specific banding in England and Wales. A consultation over new banding levels for 2016/17 will be undertaken.

Ross Moffat

Posted by on Thursday, the 17. December at 15.11

Ross Moffat has been a part of the Market Intelligence team at Utilitywise since early 2014. His responsibilities include delivering Market Intelligence reports to clients and managing the Utility Insights Twitter account. Ross has a first class Honours degree in Business and Marketing from the University of Stirling.