A popular subsidy to incentivize U.K. citizens to switch to solar power had become too expensive to maintain and should be cut by half, the government said Monday, a move that some solar panel manufacturers and consumer groups warned will lead to industry job losses and set back attempts to encourage households to generate their own electricity as a cheaper and secure alternative.
A
popular
subsidy
to
incentivize
U.
K.
citizens
to
switch
to
solar
power
had
become
too
expensive
to
maintain
and should
be cut by half, the government said Monday, a move that some solar panel
manufacturers and consumer groups warned will lead to industry job losses and
set back attempts to encourage households to generate their own electricity as
a cheaper and secure alternative.
Feed-in tariffs, or FITS, a government incentive for consumers to invest in
solar panels by providing a guaranteed payment for the electricity they
generate, had become "unsustainable" with more people signing up to
the scheme than initially anticipated, said Climate Change Minister Greg
Barker, who today announced a consultation on the amount of state aid given
towards these purchases.
British FITS rates are among the highest in
Europe
, and
exceed those in
France
,
Germany
and
Italy
. In effect,
the programs mean electricity consumers pay for subsidizing renewable energies.
Since the introduction of the scheme the average cost of solar panels has
fallen by at least 30% and in some cases, as much as 70% since 2008, said
Barker. The government argues that as costs have come down, so the size of
company profits have risen too and that subsidies should be cut in turn.
The scheme was now "as much about consumers accessing [the subsidy] as
accessing the technology," Barker said in a speech last week, pointing to
"high net worth individuals chasing returns which are now easily reaching
double figures at a time when interest rates for savers have collapsed to an
historic low."
But solar panel makers say the changes are short-sighted, hurried and will lead
to job losses. "Greg Barker is just going for bust instead of boom in
U.K.
solar
-- 25,000 jobs are now at risk," tweeted Howard Johns, managing director
of Southern Solar.
And the chief executive of Good Energy, a renewable electricity supplier, said
the worst effects of the subsidy cut will be felt by communities and consumers
who rely on the scheme to give them control over rising energy bills.
Good Energy CEO Juliet Davenport said: "These changes show that the
Treasury doesn't have a real grip on the economics of the energy market, and in
particular the value of energy generated in the
U.K.
compared with the energy we have to import from abroad."
But a report Friday by consultants PwC said deeper and faster cuts to the
subsidy would aid the industry in the long term by protecting the local solar
market from creating a potential bubble before any changes took effect.
"A deep and fast cut in rates would constrain spending to fit the current
spending envelope while maintaining the market for new installations,"
said PwC Renewables and Clean Tech Director Daniel Guttmann.
The
U.K.
's
move follows a similar move in
Germany
, the
world's biggest solar panel market. On Thursday, the country's energy supply
regulator said it would cut solar subsidies by 15% from Jan. 1.
The
consultation will close on Dec. 23, said Barker.
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