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UK Slashes Renewable Energy Subsidies, Costs Thousands Jobs

The UK Government has slashed subsidies to small-scale renewable energy technologies, with the solar Feed-in Tariff being cut by 65%.

News of the renewable energy cut is of no real surprise, and has been hanging over the country’s renewable energy industry since May when the Conservative Party was re-elected into office, and Amber Rudd appointed as the new Energy and Climate Change Secretary.

In an announcement made on Thursday, the Department of Energy and Climate Change revealed the cuts to the country’s Feed-in Tariff and Renewable Obligation schemes, claiming that they were trying “to deal with the projected over-allocation of renewable energy subsidies.” The original schemes had been set as a static figure to be paid out through subsidies, which was reached much sooner than the 2020 date originally offered. The UK “Government has since taken action to reduce this overspend which includes the announcements” of cuts to the two renewable energy schemes.

The Feed-in Tariff for sub-10kW solar projects will be reduced from 12.03p/kWh down to 4.39p/kWh, while PV systems with a capacity of 10-50kW will see their tariffs fall from 10.90p/kWh to 4.59p/kWh.

These cuts could have been worse — the DECC had originally proposed cuts of 87%, instead of this week’s 65% — but the impact is still going to be huge. The DECC’s own impact assessment of its proposed cuts predicts that the solar industry could suffer job losses between 9,700 and 18,700.

“My priority is to ensure energy bills for hardworking families and businesses are kept as low as possible whilst ensuring there is a sensible level of support for low carbon technologies that represent value for money,” said Secretary of State for Energy and Climate Change. “We have to get the balance right and I am clear that subsidies should be temporary, not part of a permanent business model. When the cost of technologies come down, so should the consumer-funded support.”

This, despite the fact that another impact assessment by the UK Government showed that cuts to renewables could cost the country 63 million tonnes of CO2.

The UK is also more than happy to continue subsidizing fossil fuel generating technologies to the tune of £26
billion and upwards.

“It’s good that the Government has listened carefully to our concerns about their original proposals, and has modified some of them based on evidence we have supplied,” said Maria McCaffery, RenewableUK’s Chief Executive. “The cuts in tariffs for small and medium-scale wind energy projects remain challenging, but they are not as severe as those originally proposed, meaning that a greater level of new capacity can come forward.”

Joss Blamire from Scottish Renewables took a much less diplomatic tack in his response to the impact the cuts will have on Scotland’s hydro, onshore wind, and solar industries.

“Government has ignored clear evidence provided by industry that proposed cuts would curtail development and slashed hydro tariffs even further than proposed, in some cases by up to 45%,” he said. “With the vast majority of hydro projects in Scotland, reductions at this level will now mean a recent renaissance in the sector north of the border will effectively come to an end.”

“Onshore wind suffers twice. Firstly this technology – which at this scale allows businesses, particularly in rural areas, to take control of their own energy bills – sees support through the FiT scheme fall by up to 65%. Secondly caps to the number of turbines which can be built, hidden in the detail of the review, mean, for example, that just three 50-100kW machines and three 1,500kW machines can be deployed every three months across the UK, scuppering plans for community and locally-owned developments.”

“The tidal wave of public support for solar – one of our lowest-cost and most popular renewable energy technologies – resulted in more than 50,000 responses to the Feed-in Tariff consultation,” Mr Blamire continued, turning his attention to the solar industry. The call for leniency in those responses has clearly been heeded by Government, with cuts to solar less harsh than suggested. This is good news for households and installers, but the more severe reduction in rates for larger schemes means it is less so for high energy users looking to go green.

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