The UK Government is proposing to drastically reduce incentives for solar power and has threatened to close the Feed-in Tariff (FiT) scheme.
It has launched a consultation with revised tariffs “based on updated technology cost data” in a bid to cut costs.
FiTs provide householders, businesses and public sector organisations guaranteed payments for the energy they generate. They also get additional payments for power that is exported to the grid.
Under the new proposals, the amount of money paid for rooftop solar and small wind projects would be limited from next year.
For new solar installations up to 10KW, it would fall to 1.63p/kWh while it would reduce to 8.61p/kWh for wind projects less than 50KW.
The government aims to limit FiT spending to between £75 million and £100 million by 2018/19.
However it plans to close the scheme for new applicants from January next year if it is unable to meet the target.
The document states: “If cost control measures are not implemented or effective in ensuring that expenditure under the scheme is affordable and sustainable, government proposes 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.”
According to DECC, the FiT scheme has exceeded all expectations and has led to significant reductions in technology deployment costs. However “this has also come with costs exceeding our projections”, it said.
“The 2010 Impact Assessment on the Feed-in Tariff projected that we would reach 750,000 installations by 2020: by the end of July 2015, we had already reached over 730,000”, DECC adds.
The consultation ends on 23rd October 2015.
The news follows the government’s announcement to scrap subsidies for onshore wind from April 2016.