UK solar power subsidies for home owners in death spiral

Posted: August 28, 2015 by oldbrew in Energy, government, greenblob
Tags: ,

[image credit: newsolarpanels.co.uk]

[image credit: newsolarpanels.co.uk]


Looks like curtains for small-scale solar in the UK if the planned new rate of 1.63 pence per kilowatt hour is approved. Financial reality is starting to catch up with ‘green dreams’ in the UK as BBC News reports.

The UK government says it plans to significantly reduce subsidies paid to small-scale green power installations. Under the proposals, the amount of money paid to home owners and businesses producing electricity from roof-top solar and small wind turbines will be limited from January 2016.
Subsidy schemes could be closed to new entrants from the start of next year.


Ministers want to ensure that consumers who pay for the schemes through their bills get the best deal possible. They admitted in July that spending on renewable energy schemes was set to be higher than expected.

Having already announced plans to limit cash paid to on-shore wind generation and large-scale solar farms, the Department of Energy and Climate Change (DECC) is now proposing significant cutbacks for small-sized green energy producers.

Solar and wind energy installations of less than 5MW are supported by feed-in tariffs – schemes that pay producers a subsidy for the electricity they generate, plus a bonus for any electricity exported back to the national grid.

Under the new proposals, the amount to be paid from next year will fall to 1.63p per kilowatt hour from a current level of 12.92p for a new residential solar system.

The consultation says that government spending on feed-in tariffs should be limited to between £75m and £100m from 2016 to 2018/19. But DECC warns that if that limit is breached then “the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible,” which is expected to be January next year.

Source: Subsidies for small scale solar face steep cuts – BBC News

Comments
  1. ivan says:

    Common sense is starting to be applied.

    This should enable us all to see if, in fact, all the alternative energy production is viable on its own. Since it isn’t viable without the subsidies maybe we will see the green folly start to fall apart.

  2. Bryan says:

    Lets hope that there are no binding contracts with current solar installations.
    As always the devil is in the detail.

  3. oldbrew says:

    Bryan: existing contracts can’t be overturned – that’s the law.

  4. Graeme No.3 says:

    oldbrew:
    not in Spain. Not only did subsidies get cut but solar PV will get charged a “disruption charge” for being connected to the grid.
    So it could come down to “if you want solar, you can do it only in your own home”.

  5. J Martin says:

    A government in power cannot bind the next government. So existing contracts can be overturned.
    So anyone thinking that any contract for raking it in risks disappointment. Parliament can both make and rescind laws and contracts.

  6. J Martin says:

    And in any case, theres always the small print.

  7. PeterMG says:

    This is why there is so much opposition to the proposed Transatlantic Trade and Investment Partnership. It would bind governments so that Corporations could sue if they changed the Law. As anti democratic as you can get, and a destroyer of jobs.

  8. Fanakapan says:

    Leaving the legal aspect to one side for a moment, the new feed in tariff regime will see most of the solar installer firms going down the WC ? So assuming that many panels will not see out their predicted 25 year payback time, and assuming a scarcity of tradesmen able to perform repairs, and the elevated costs associated with such scarcity, then its a fair bet that those pulling in the larger FIT’s will dwindle with increasing speed many years before the 25 year period has elapsed.

  9. oldbrew says:

    J Martin says: ‘A government in power cannot bind the next government. So existing contracts can be overturned. So anyone thinking that any contract for raking it in risks disappointment. Parliament can both make and rescind laws and contracts.’

    That’s not the point. The home owner’s contract is with the electricity supplier not the government.

  10. J Martin says:

    OK, I’m not a lawyer. But clever move by the government inflict the energy business with a requirement to rob the poor and give to the rich. In my opinion those contracts remain vulnerable since they are effectively a result of government policy and were not the free will of the energy companies.

  11. oldbrew says:

    Breach of contract is a criminal offence😐

  12. I expect the FIT is paid at a rate determined by the government, so the electrical supply company will ‘give you’ so many units x the current FIT rate, if it drops to 1.83p/unit from 12 ish, then thats what you get.

    The concept of a contract and law is infinitely flexible.

    Just looking at the proposal document for somewhere to give my feedback to government and found this gem:

    ‘The continuing concerns around the de-rating of wind turbines is one instance where technology bands failing to reflect developments in technology may have incentivised some inefficient deployment (with some developers capping 800-900kW turbines at an output of 500kW). ‘

    So it would seem that wind suppliers are denoting their turbine outputs to be notionally lower in power to gain an enhanced rate of payment, and there we all were thinking that green suppliers were doing it to save the planet!!!

  13. A high court judge can always overturn a contract. As always judges are loathe to undo something agreed previously **unless it can be shown that the contract was defective in some serious way**.

    A change in law causing a contract to become defective just gives the judge a directive on how to rule on a case. Once the first one has been canceled the rest just give up and go home….

  14. oldbrew says:

    steverichards1984 says: ‘the electrical supply company will ‘give you’ so many units x the current FIT rate, if it drops to 1.83p/unit from 12 ish, then thats what you get.’

    No, a change in rate only applies to new contracts. Once you have a contract the rate only changes in line with inflation (as per an agreed inflation formula).

    ‘The energy department on Thursday insisted that households that have already had panels installed will not see their subsidies cut.’
    – See more at: http://www.thegwpf.com/at-last-britain-signals-end-of-solar-handouts/