UK reduces subsidies for large-scale solar UPDATED

Greg Barker, the UK energy minister, has completed his review of subsidies for solar power under the feed-in-tariff scheme, and, as expected, he has reduced the amount of money available for installations that provide over 50kW.

Ministers say the idea behind this review is to make sure that large-scale solar farms don’t hoover up money that was meant for households and small businesses to install a small amount of solar power (usually with solar panels on roofs).

Barker said today:

Our cash for green electricity scheme is a great way to reward homes, communities and small businesses that produce their own renewable power.

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.

But solar campaigners say the move is being driven by the Treasury, which has told the energy department to cut ten per cent, or £40m, from its budget for FITs by 2014-15. One glance at the new bandings show that the move should certainly save the government money:

Old bandings New bandings
Band (kW of capacity) Subsidy (p/kWh) Band Subsidy
10-100 32.9 10-50 32.9
100-5,000 30.7 50-150 19
150-250 15
250-5,000 8.5

One unexpected outcome of the review is that subsidies for anaerobic digestion have gone up, from 12.1p/kWh for anything up to 500kW, to 14p for anything up to 250kW and 13p for anything from 250kW-500kW.

Overall, this package should save the government a significant sum of money, although I haven’t yet been able to ascertain how much. I’ll let you know when I hear from the department.

UPDATE – The energy department says this move will save £30m from the FIT budget. That is three quarters of the way to achieving the savings demanded by the Treasury.

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