Government sets out ambitious plans for solar energy, cuts subsidies

The Government has set out their ambitions to increase solar installations in the UK to 22GW by 2020 – 20 times the current amount.  The announcement from the Department for Energy and Climate Change also laid out their plans for deep and ongoing cuts to the solar feed in tariff, leading many to question how they intend to reach their ambitious target while simultaneously making solar energy less profitable for its owners.

Ed Davey, the new Liberal Democrat Secretary of State at DECC, described the reforms as “making clean, green, renewable energy available to the many not the few”, with the cuts to the subsidy making it possible to share the limited budget out more widely.

Under the new system, the feed in tariff will be halved as previously proposed, and continually reviewed to match the falling costs of installation.  Costs of solar PV has reduced dramatically since the subsidies were introduced due to the maturing technology, a drop in the wholesale price of crystalline silicon cells, and Chinese companies massively raising production.

The changes will give the UK a similar system to Germany, which reviews its subsidy level every six months – and still has a thriving a growing solar industry with over 17GW of solar PV already installed.

And after the last attempt by the Government to reduce the subsidy which was overruled by the High Court for being unlawful, DECC is providing some long-term clarity and predictability for the industry.

Which is why, despite complaints from some solar installation companies and Her Majesty’s Loyal Opposition, the mood in the industry in general has been to give cautious support to the reforms.