UK to scrap subsidies for small-scale solar, announces changes to FIT

The U.K’s Department for Energy and Climate Change (DECC) has today confirmed that it is to remove many of the country’s current subsidies for solar power from April 1, 2016.

Small-scale solar PV plants under 5 MW in size will no longer be eligible for the Renewable Obligation Certificate (ROC) scheme from next year, DECC confirmed, while large-scale rooftop PV installations (bigger than 50 kW) will no longer be eligible for pre-accreditation for the feed-in tariff (FIT) – a policy tweak that could serve to halt the growth of the commercial rooftop PV sector.

The news follows days of speculation that changes to the U.K.’s solar support landscape were afoot. Conservative Energy Secretary Amber Rudd – appointed to the role only in May – remarked that the subsidy revision was necessary in order to ensure consumers are protected from higher energy bills.

"My priorities are clear," Rudd said. "We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way.

"Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies. We’re talking action to protect consumers, whilst protecting existing investment."

DECC claims that renewable subsidies are claiming too much of the available Levy Control Framework (LCF) monies, and has moved to restrict the amount available to clean technology, citing "higher than expected uptake of the demand-led FITs and the RO" as well as a "faster-than-expected advancement in the efficiency of the technology".

Such rhetoric has angered the solar industry, which has attacked the government for effectively punishing a technology for being cheaper, more efficient and more popular than expected. The U.K.’s Solar Trade Association (STA) has said that solar PV accounts for just 6% of the funds paid out under the ROC scheme, and has offered to work with DECC to find ways to the make the FIT more efficient for government.

Speaking to the BBC’s Today program, STA board member Jonathan Selwyn said that these cuts will have a large impact on the U.K.’s solar industry, which was the most dynamic in Europe last year and has already enjoyed rapid growth in 2015.

"Let’s get this straight, in the RO, which is the solar farm’s main support subsidy, it’s costing about three pounds per annum on people’s energy bills – it’s a tiny amount when you compare it with other types of energy, like nuclear for example," Selwyn said, adding that government support for solar over the past five years has been instrumental in growing the industry. The STA has long campaigned for "one final push" to enable solar to operate effectively in the U.K. without subsidy, but it appears that those calls for a level playing field have fallen on deaf ears.

The changes

DECC has proposed that the RO for new solar projects of 5 MW or below will be closed from April 1 2016. With a grace period available for developers who either obtain preliminary accreditation before 21 July 2015 (ie, those that have already attained preliminary accreditation), or have made “significant financial commitments to projects on or before 21 July 2015”. Developers that experience grid connection delays that are outside of their control would also be eligible for the grace period, which will allow projects to enter the RO on or before March 31 2017. Grandfathering of PV plants is also to be ruled out.

The chief change to the FIT is the removal of pre-accreditation for solar PV installations larger than 50 kW. Pre-accreditation offers developers and system owners assurances that a guaranteed tariff level is in place well in advance of commissioning the installation. Removing this assurance could serve to spook would-be commercial clients keen on installing solar, the industry fears.

Schools and community groups have been offered a modicum of protection, however, via the pre-registration process – similar to pre-accreditation, but available only to certain types of customers and only for solar PV installations not exceeding 50 kW in size.

DECC has also announced it is to carry out a full review of the FIT scheme later this year, adding that it will consult on a package of further cost control measures in due course.

More industry reaction to follow…