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Cameron Government to scrap solar energy subsidies to curb green energy costs

In a latest move to tackle the spiraling costs of green energy projects, the government has proposed sweeping plans to scrap subsidies to the renewable energy sector, targeting roof-top solar panels and wood chip electricity generators. According to the government, subsidies for small scale solar farms are to be cut to protect consumers from those extra costs at the top of the soaring bills. The proposals include removing a guaranteed level of custody for coal-powered plants that were to be converted to green energy. Solar sector seems to be next in the line of fire, after subsidies for onshore wind farms were cut last month. The Conservatives announced to cut subsidies to onshore wind farms from April 2016, a year earlier than what actually was proposed in the previous Tory-Liberal Democrat coalition agreement.

Amber Rudd, the Energy and Climate Change Secretary, has announced she will consult on plans to end subsidies for some new solar energy projects and cut aid to a few biomass generators immediately which she claimed would lay off the household bills. The solar industry is of the view that subsidies were one of the cheapest ways that the government could meet its climate change targets. The Department of Energy and Climate Change (DECC) is consulting on plans that would see subsidies for new solar farms close by 2016. Ms. Rudd earlier proposed the early closure of the renewable obligation (RO) scheme for new solar projects generating less than five megawatts from April 2016.

“My priorities are clear. We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way,” she said. “Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewable industry to survive without subsidies. We’re taking action to protect consumers, whilst protecting existing investment.”

This move is the latest in a series of measures government has announced since the May election to scrap crucial subsidies for renewable power, dealing a severe blow to Britain’s green energy industry. Following the plans announced in the Conservatives’ Party manifesto, Ms. Rudd first put a halt to the development of onshore wind farms, which the Tories have repeatedly dismissed despite being cheaper than other forms of green energy. The Chancellor, George Osborne then ditched a climate change tax exemption in the Summer Budget in July. The budget scrapped the Conservatives’ commitment to increase the environment tax take as a share of government revenues, a pledge made in the party’s 2010 manifesto.

Ms. Rudd, appearing before the energy select committee on Tuesday, confirmed to MPs that the annual bill for green subsidies, paid for by households on their energy bills was forecast to hit £9.1 billion ($14bn) by 2020-21, exceeding the £7.6 billion ($12bn) cap set by the Treasury’s Levy Control Framework (LCF). It is estimated that the overspend would add £20 to an annual household bill. Although the excess will remain within the 20 percent ‘headroom’ submitted by the plan to allow for unforeseen changes in energy prices and technology costs. So the main question here is will the already burgeoning UK solar industry be able to sustain without the subsidies?