UK: Solar subsidy withdrawal rumors gather pace

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Rumors that the U.K. government is set to seriously restrict or perhaps even abolish solar support subsidies have gathered pace over the past few days following a vague threat by the Conservative government last week that its review of green subsidies could culminate in a "big reset".

Both the BBC and British newspaper the Daily Mail ran stories at the end of last week warning that the government was due to discuss ways to cut emissions only in the most "cost-effective way possible", with sources stating that this could mean major nuclear and gas expansions, and a withdrawal of support for solar farms.

The Daily Mail source said: "We need to deal with those extra costs at the top of the electricity bill. A struggling pensioner has to pay it when she doesn’t have the benefit of putting solar panels or a wind turbine on her roof. There is a hardening view in the Cabinet that we’ve got to deal with green subsidies."

Last month, new Energy Secretary Amber Rudd – who’s appointment was largely welcomed by the renewable sector – ominously warned that "all that support costs money, and we cannot ignore the fact that, obviously, people want subsidies if they are on the receiving end of subsidies, but we have to ensure that we get the good measure of it."

The U.K.’s solar industry is bracing itself for further cuts in support, following on from last year’s removal of the renewable obligation (RO) certification scheme for large-scale (>5 MW) solar PV farms two years early. Insiders fear that the country’s feed-in tariff (FIT) could either be severely scaled down or even scrapped completely.

Speaking to the BBC, Leonie Greene of the Solar Trade Association (STA) confirmed the anxiety. "The British industry is already very significant today. It employs more than 30,000 people and turns over billions of pounds," Greene said. "It is quite clear that globally this industry is going to be worth trillions. So it is incredibly important that in terms of the global race that the Prime Minister is talking about, that we make sure we have a strong solar industry in the U.K."

Greene told pv magazine that the STA will have further comment to make once additional details are known on Wednesday, July 22. "But suffice to say, for now there was nothing in the Conservative manifesto about solar power!" she added.

Current subsidies for the U.K. renewable energy sector are expected to amount to around £4.3 billion ($6.68 billion) this year, a figure that is funded directly by consumers via green levies on bills, and is a political hot potato in the country at the moment.

The STA has long campaigned for a more efficient FIT that would provide solar the extra push it requires in order to reach grid parity, and recently outlined its support suggestions in its Solar Independence Plan that would see solar able to exist subsidy-free by 2020.

Friends of the Earth has also campaigned heavily in favor of smarter support, and Alasdair Cameron has attacked the proposed changes, saying: "The government is behaving incredibly irresponsibly in attacking renewable energy and the green economy – locking people into higher bills, bad health and dying industries."

He added: "There is no green-cost crisis – the only problem is that renewables have done better than the government expected. This is a problem of [U.K. chancellor] George Osborn’s own creation."

Can subsidy-free solar survive?

Should the worst happen, the Guardian newspaper has posited a post-subsidy future for solar in the U.K., citing research by the Policy Exchange thinktank that found FITs and the RO scheme added just £10 and £38 to the average annual electricity bill, with solar subsidies costing a mere £10 per year – or 0.7% of the average annual household electricity and gas bill of £1,338.

Jim Watson, director of the U.K. Energy Research Centre told the Guardian that if the support for FITs and RO was scrapped then the solar industry could "drop off a cliff".

"Were subsidies to simply stop I think activity would probably fall off very significantly," Watson added. Solar in the U.K. currently costs around £80/MWh ($124/MWh), compared to fossil fuels at £50/MWh.

"Eventually you’d want renewables to stand on their own two feet and not have subsidies," said Watson. "The point I’d make with solar is that costs have been reducing very rapidly. It is not yet at that point where it can stand on its own two feet, but any government should expect that point to be within about five years."

Assessing the current solar support system, the FIT, Policy Exchange found that the current tariffs are actually rather generous, and "could withstand a substantial cut without halting deployment of solar PV."

It is expected that the U.K.’s Department of Energy and Climate Chance (DECC) will make an official announcement on this matter on Wednesday, July 22.

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