Government drastically reduces tariffs for large and medium sized solar panel installations

Subsidies for renewable electricity have been dramatically cut by the government after fears that “solar panel farms” were growing out of control.

Following an emergency review announced in February, the tariffs for medium and large scale solar panel projects have been heavily cut, with some sizes of installation getting over a 70% fall in funding.

Critics including the UK Green Building Council accused the government of damaging confidence in the solar power by “snatching away” promised subsidies.

The new tariff rates, paid to producers of renewable electricity from solar panels, will be:

  • 19p/kWh for 50kW to 150kW
  • 15p/kWh for 150kW to 250kW
  • 8.5p/kWh for 250kW to 5MW and stand-alone installations

A 50kW array is around the size of two tennis courts. The old rates were significantly higher:

  • 32.9p/kWh for 10kw to 100kw
  • 30.7/kWh for 100kw to 5MW and stand-alone installations

Climate change minister Greg Barker said the reductions were essential to prevent large scale “solar farms”, which have been springing up in Cornwall, diverting money from the scheme which was meant to help homeowners and small businesses.

“I want to make sure that we capture the benefits of fast falling costs in solar technology to allow even more homes to benefit from feed in tariffs, rather than see that money go in bumper profits to a small number of big investors.

“These proposals aim to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The FITs scheme was never designed to be a profit generator for big business and financiers,” he said.

The department of energy and climate change said that had the scheme continued unchecked, funding for solar farms would have reached the equivalent of 50,000 solar panels on homes.

Dangling carrots and then snatching them away, as we’ve seen in the FITS review today, results in a serious loss of confidence

Paul King, chief executive UKGBC

Paul King, chief executive of the UK Green Building Council, said that while tariffs remained the same for small domestic solar panels, they could be damaged indirectly by a loss of confidence throughout the solar industry.

“Dangling carrots and then snatching them away, as we’ve seen in the FITS review today, results in a serious loss of confidence, which could be devastating for some in this sector, and damaging for the Government’s plans to decarbonise the UK,” he said.

“If you take out a nice big lucrative end of the market, what’s going to be the impact on the smaller end?”

However he said it was still “harder to justify” the previous level of subsidies for solar farms because the tariffs are funded from consumer energy bills.

Tthe industry had feared that the 50kW cut off point is much too low, and will damage the viability of solar arrays on schools, hospitals and social housing.

In February, Paul Slater, sustainability manager at Kier, which bought solar panel expert Beco for £2.4m last November, said the firm had about 20 solar array projects for social housing and schools in the pipeline that would not go ahead without the feed-in tariff subsidy.

Stuart Pocock, technical director for the Renewable Energy Association, said that “hundreds” of buildings had plans to install solar arrays that would fall foul of the “arbitrary” 50KW cut-off point.

“A lot of local authorities see the tariff as a way to mitigate carbon but also use the funds from it to do other things,” he said.