The Department of Energy and Climate Change (DECC) has released a consultation document in which it proposes to cut support to solar PV, wind and hydropower schemes.
The government states that while “FiTs have exceeded all renewable energy deployment expectations… deployment success has also come with costs exceeding our projections”.
“We expect to breach the limits of the Levy Control Framework (LCF), the amount of money agreed within government which can be added to consumer bills to pay for low-carbon electricity generation, and deploy more small-scale renewables than we envisioned when the scheme started”.
The consultation document proposes cuts to the levels of support provided to solar PV, wind and hydropower from January next year, however DECC has said that it would close the FiT scheme in four months' time if it thinks it will be unable to meet the new spending cap.
"If cost control measures are not implemented or effective in ensuring that expenditure under the scheme is affordable and sustainable, government proposes that the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2016, while keeping the export tariff as a route to market for the renewable electricity they generate," the document states.
The plan has drawn fury from the UK renewables sector. Mike Landy, head of policy at the Solar Trade Association, said: “A sudden cut combined with the threat of scheme closure is a particularly bad idea – it will create a huge boom and bust that is not only very damaging to solar businesses and jobs but does nothing to help budget constraints.
“We really are astonished at how self-defeating these proposals are. Instead, we are calling on the government to work with the solar industry to deliver our plan for a stable glide path to subsidy-free solar.”
Leonie Greene, head of external affairs at the STA added that the British solar industry had “flourished thanks to public support and delivered unprecedented cost cuts. Government should back that momentum, not push the industry over a cliff when it is so near to being able to repay public investment through lower and more stable bills in future”.
Maf Smith, deputy chief executive of trade group RenewableUK, said: “It’s important that we all work to manage costs, but it looks as if the long term vision has been lost.
He said the small and medium wind sectors were “at one with the government in their desire to cut carbon at lowest cost to the consumer. But they can’t do this when government makes sudden and damaging changes which undermine investment.”
He warned: “The next four months will turn the British energy market into a wild-west market with energy consumers stuck in the middle.”