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News - 7 November 2011

Government cuts benefits of Solar Power

Subsidies for large-scale solar power installations are to be cut drastically, in a move that Government ministers said would preserve funds for households to put up panels, but industry warned would mean a slower uptake of renewable power.
 

The Government has been accused of killing off the solar energy industry, putting 25,000 jobs at risk, by slashing the benefits available to those signing up.
"Thousands of enterprises will be bankrupt by Christmas," Said Daniel Green, chief executive of solar firm HomeSun.
 

The benefits available to home owners meant that the Government paid a feed in tariff to people prepared to install solar panels. This meant that homeowners were paid for any power they generated and did not use. But this benefit has been cut in half, as of December 12.
 

Under the old system, people could earn £1,200 a year from their solar panels, on top of reducing their bills. This meant the outlay of several thousand pounds to install them could more easily be justified and that some companies were even offering to install panels free for a cut of the profits. It would now take up to 25 years to get a return on your investment.
 

The reform, originally trailed in February but delayed by a consultation that was recently completed, will favour domestic and other small-scale installations of solar power, of up to 50kw – typically enough to cover several houses, or about two tennis courts according to the government, but not enough for some of the community-scale installations some developers had planned, which would cover fields.

The government said the tariffs were cut because of the potential cost to energy bill-payers. According to government calculations, a field-size system of 5 MW would reap subsidies of £1.3m per year. Twenty such schemes would receive subsidies equivalent to that of about 25,000 households.

As of the beginning of August, installations of solar power that are between 50 kilowatts and 150 kilowatts of capacity will receive 19p per kilowatt-hour produced, down from 32.9p. Larger installations of up to 250kw will receive a reduced tariff of 15p per kwh and field-size installations of between 250kw and 5 megwatts of capacity will get half that, at 8.5p per kwh. Both larger sizes were previously paid 30.7p per kwh.

Solar panel costs have come down dramatically: the industry expects that, even in the UK, solar power will be comparable to offshore wind energy by 2015.

The cost of the feed-in tariffs is met not from government funds but by energy companies adding small amounts to bills for all customers.

In comparison, the rates of support for anaerobic digestion, used on farms, will be raised to 14p per kwh for installations under 250kw of capacity, falling to 13p for installations up to 500kw.

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ABDS Chartered Certified Accountants of Southampton.
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