UK solar subsidy reduction could spook investors

The government points out that its proposed reduction in feed-in tariffs for large solar arrays will not apply retrospectively. Only new entrants after August 1 this year will be affected by the plans.

But it can take 12–18 months to set up a big solar power scheme. In practice, plenty of companies are part of the way through the process of securing planning permission from local authorities and connection permits from network operators.

They will already have spent large sums of money – yet the proposed changes could rob their schemes of any commercial viability. Philip Wolfe is the founder and managing director of Ownergy, a company that helps customers install and maintain solar arrays.

He believes that Greg Barker’s suggested policy changes will shake the confidence of anyone investing in renewable energy on the basis of government encouragement:

If this can happen to large scale solar today, it can happen to wind next week or to nuclear tomorrow.

People will think twice about whether the government’s policy will be there before they come to make investment decisions. They will wonder how fast the rug can be pulled out from under them.

Leave aside whether Barker’s proposals are good or bad ideas in themselves. The fact that policy can change in a way that disadvantages existing investors will not be quickly forgotten. It could undermine confidence in the future of the renewable energy sector.

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