A spokesperson for the Department of Energy and Climate Change (DECC) said an announcement was "imminent" on the FiT, but refused to be drawn on speculation about how deep the cuts would be.
According to the
Financial Times, DECC is expected to propose the FiT for solar installations should be cut from its current 43 pence per kilowatt hour (kWh) to 20 pence per kWh – less than the 75 per cent, which the
newspaper reported last week, some officials within DECC had been calling for.
In a speech to the solar industry, today, Climate Change Minister Greg Barker, justified the imminent cuts, saying solar was "burning through the budget at an unsustainable rate".
Under the FiT, solar installations have proved much more popular than other technologies such as wind, with over 100,000 photovoltaic systems now up and running, representing over 305 megawatts of installed capacity.
The Government has been carrying out a review of the FiT and this summer slashed tariffs for larger-scale solar installations. However, Barker, along with others at DECC, is concerned that solar is still gobbling up the FiT’s £860 million budget, while, providing bumper returns to a few as the price of solar has dropped.
"I cannot preside over a scheme, which allows a solar panel installation in some of the least sunny locations in Britain to generate returns of more than 12 per cent," he told the solar industry today.
Lower tariffs, he argued, would mean uptake with FiTs support "could continue to grow in a sustainable way".
Solar industry concerns
The solar industry has been preparing itself for a cut to the FiT, but some are warning that a cut of 50 per cent could have dire consequences for the industry, and in particular schemes, such as those offering households 'free’ solar. Others are worried the industry is being sidelined, as public concern rises over fuel bills. The FiT is paid for through a small charge added to electricity customers’ bills.
"Claims that maintaining solar subsidies adds dramatic costs to household bills is simply untrue," Andrew Lee, international sales manager and solar panel manufacturer, Sharp Solar, said. "Amending the Feed-in Tariff to encourage the solar industry to grow 20 per cent will mean it will cost consumers just £2 a year to support it – less than the cost of a light bulb. We’ve worked within the industry to present a way forward which would keep costs to consumers down and continue to keep the market growing.
"We will continue to maintain a dialogue with the Government but would urge the Coalition to maintain solar as part of its plans moving forward and not let a burgeoning industry falter as it is beginning to properly develop."
The Government launched the FiT in April 2010 to kick-start renewable energy generation in the UK. It guarantees an inflation-linked income for on-site renewable electricity projects less than five megawatts in size for a period of up to 25 years.
According to the Renewable Energy Association, jobs in domestic solar installation have soared from 22,000 to 25,000 on the back of the FiT.
Industry consultationBarker today said the Government would launch a consultation with the industry over the cuts. He said the consultation would also look at establishing a more transparent, streamlined and "smarter" FiT, "which prioritises
energy efficiency and supports the right low carbon heat and electricity technologies".
