Government Considering Plans To End Solar Subsidies

The Department of Energy & Climate (DECC) is considering plans that aim to end subsidies for some new solar farms by 2016. The department is also undertaking a review of the entire feed-in tariff (Fit) structure that has led to the installation of panels on 1.5% of UK homes.

The termination of the subsidy programs has been met with a great deal of controversy, as proponents of sustainability believe that the a failure to continue the program could have negative consequences regarding climate change.

Householders who were planning to install solar panels next year could find the financial incentives to do so no longer exists. Lukasz Kisiel contends that, “the government’s review of the whole feed-in tariff (Fit) structure for the installation of solar panels is likely to lead to a reduction in the subsidies which will discourage homeowners in the future from using this method of sustainability.”

The government believes that the move is necessary to protect consumers and keep bills down. According to Amber Rudd, the energy and climate change secretary, “We need to keep bills as low as possible for hard-working 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.

When the Fits were launched in 2010, a typical large domestic photovoltaic system cost between £15,000-£18,000 to install. The early adopters were promised 41.3p per kilowatt hour (kWh) generated for 25 years, plus savings on their electricity bills worth up to £160 a year. Incomes and savings of more than £30,000 were promised for a £15,000 investment.

The prices of these systems began to fall over the past five years, and they can now be installed for around £5,000-£6,000. The government has responded to this reduction in price but cutting the income paid accordingly.

Although the cost of installing a PV panel has reduced significantly, the discontinuation of the subsidies program altogether will most likely eliminate any financial incentive households have to install solar panels. This plan could put a halt to all future installations of solar panels.

This would be an unfortunate scenario, considering how much progress the country has made over the last five years to help fight climate change. The removal of the solar energy subsidy programs appears to be a step in the wrong direction, at a time when climate change is increasingly becoming a more serious problem.

The 2015 Paris Climate Conference, for the first time in over 20 years of UN negotiations, has aimed to achieve a legally binding an universal agreement on climate, with the aim of keeping global warming below 2°C. The forum is looking for the cooperation of over 190 countries in its efforts to address climate change.

“I would like to see the government taking a longer view on sustainability especially within the energy field so that plans can be made for the longer term and not short term quick fixes,” says Kisiel.