UK Government Proposes Catastrophic Cuts To Renewable Energy Incentives

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The UK’s Department of Energy and Climate Change has proposed to make calamitous cuts to the country’s renewable energy Feed-in Tariff scheme.

Dark Days for UK Renewable Energy

Ever since the re-election of the country’s Conservative Government and the appointment of MP Amber Rudd to the position of Energy and Climate Change Secretary, the UK’s renewable energy industry has been on tenterhooks, as proposal after rumor after proposal placed the industry in ever more increasing jeopardy.

In June, the Department of Energy and Climate Change (DECC) announced that it would be ceasing allowing onshore wind farms access to the country’s main renewable energy subsidy scheme, the Renewables Obligation Scheme (RO). A month later, the DECC revealed that it had not only included more renewable energies into the same category of onshore wind, but that it would be initiating consultations on allowing solar PV of 5 MW or under access to the RO. Additionally, the DECC also initiated a consultation on changing the Feed-in Tariff scheme.

And it was only earlier this month that the Scottish and Welsh Governments teamed up to send a letter to the UK Government, pleading with it to open discussion on small-scale renewable support.

On Tuesday of this week, a coalition of 100 organizations wrote to the UK Prime Minister in an effort to convey their support for small-scale renewable energy electricity ahead of the Feed-in Tariff review. “We are writing to express our strongest support for the continuation of the Feed-in Tariffs (FiT) for renewable energy and ask you to ensure the forthcoming FiT Review supports an ambitious level of local deployment,” the signatories wrote (PDF).

“We are looking to the Prime Minister to take control of energy policy after a summer of hugely damaging policy decisions,” added Leonie Greene, Head of External Affairs at the Solar Trade Association. “There was nothing in his manifesto about rolling back solar power which Government’s own polling shows is supported by over 80% of the British public.”

Government Turns a Deaf Ear

However, all of this seems to have fallen on deaf ears, as the DECC has now proposed a cut to the Feed-in Tariff scheme in a review of the system that is set to end on October 23. According to the “Consultation on a review of the Feed-in Tariffs scheme” published by the DECC Thursday, the proposals include “measures to place policy costs on bills on a sustainable footing, improve bill payer value for money, and limit the effects on consumers who ultimately pay for renewable energy subsidies.”

The cuts to the FiT will affect solar PV, wind, and hydropower projects, and attempt to cap government spending on FiTs to £75 million to £100 million from 2016 to 2018/19. Most noticeably, domestic solar support could be cut by 87%, commercial rooftops by 82%, as well as devastating cuts to onshore wind.

From the report, the proposed generation tariffs are as follows:

However, the DECC was clear to state that it would close down the scheme entirely in four months’ time if it believes it cannot keep the FiT spending under cap. Specifically:

If cost control measures are not implemented or effective in ensuring that expenditure under the scheme is affordable and sustainable, Government proposes that the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2016, while keeping the export tariff as a route to market for the renewable electricity they generate.

Any changes that are approved are set to be fast-tracked, “likely to take effect as soon as legislatively possible, which we expect to be January 2016.”

Among the many recommendations made in the review is the decision to close the FiT to any new technologies, as well as closing the generation tariff to new installations from January 2016 onward. Extensions to existing installations will similarly not be able to access the FiT scheme, as well as a revision to generation tariffs.

Immediate Industry Reaction

“What we needed in this Review was a clear vision for how we get to a point where cost effective, small-scale renewables are common-place, with all homes and businesses able to be part of a productive, vibrant low carbon economy,” said RenewableUK’s Deputy Chief Executive, Maf Smith. “This Review is not about how we build that prosperous future but simply about short term politics and accounting.”

“The proposals in the Comprehensive Feed-in Tariff Review are, quite simply, terrible news for homeowners, businesses, communities and those local authorities which have plans in place to develop renewable energy schemes,” said Joss Blamire, Senior Policy Manager at Scottish Renewables. “The levels of reduction in support announced today will severely curtail development of small-scale onshore wind and solar projects and endanger jobs and investments across the country.”

“The cuts could also spell the end for much of the hydro industry, which has enjoyed a recent renaissance but relies more heavily on Government support because of the length of time taken to develop projects and the sector’s high capital costs.”

“Rooftop solar has to been seen as one of the key technologies for a decarbonised future, with consumers and businesses also gaining control over the centralised energy market, this is a phenomenally damaging and short sighted decision which sets back this goal significantly and will lead to higher costs in the medium to long term,” explained James Court, Head of Policy and External Affairs for the Renewable Energy Association.