Government to halve solar subsidy

The Government is slashing the subsidy for solar in a bid to keep its rapidly spiralling payouts within budget. DECC says that the rewrite of the Feed in Tariff (FiTs) […]

By Vicky Ellis

The Government is slashing the subsidy for solar in a bid to keep its rapidly spiralling payouts within budget. DECC says that the rewrite of the Feed in Tariff (FiTs) “won’t come as a surprise” to many in the industry.

Under new proposals announced by Energy Minister Greg Barker, the tariff for schemes up to 4kW in size will be cut from 43.3p/kWh down to 21p/kWh.

Reduced rates are also proposed for schemes between 4kW and 250kW.

Mr Barker said: “The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FITs scheme.

“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”

The Government says that if it doesn’t cut FiTs for solar PV now, by 2014-15 they would cost consumers £980 million a year, adding around £26 to bills, compared to between £250-280 million if the changes are approved.

Another change to the FiT proposes that houses would have to meet a set level of energy efficiency to receive the new tariff rates.