UK Government Unveils Plans to Slash Solar Feed-in Tariffs

The government has unveiled plans to slash by almost 75% financial incentives for larger solar power schemes on the grounds the feed-in tariff (Fit) was in danger of being hijacked by City speculators.

The move is expected to deal a death blow to low-carbon projects such as a plan put forward this week by Toyota and British Gas to provide low-carbon electricity for the Burnaston car plant near Derby.

Subsidies for 5 megawatt schemes such as Toyota's will be cut from 30.7p per kilowatt (kW) hour to as little as 8.5p – although schemes of up to 50kW for the average domestic homeowner will remain the same.

Greg Barker, the climate change minister, said the proposals out for consultation aimed at rebalancing a subsidy scheme introduced last April in an effort to prevent larger scale solar projects "soaking up" all the cash.

"The Fits scheme was never designed to be a profit generator for big business and financiers. Britain's solar industry is a vital part of our renewables future and our growing green economy. The new tariff rates we're putting forward today for consultation will provide a level of support for all solar PV and ensure a sustained growth path for industry," he said.

The Renewable Energy Association described the cutbacks as "appalling" and said every scheme over 50kW was likely "dead".

Gaynor Hartnell, chief executive of the Renewable Energy Association added: "Larger PV (solar) projects are cheaper and have a major role in driving down costs. We don't want boom and bust in this sector, either, but pulling the rug out from under the feet of those that have ventured into this market was precisely the wrong response. The UK will return to the solar slow-lane. It's as good as a retrospective change and that does untold damage to investor confidence. It's not acceptable and we will fight it."

Howard Johns, chairman of the Solar Trade Association, said: "The solar industry is one of the genuine good news stories in the UK today, providing both jobs, a new green industry and importantly some hope. Crushing it at this time is a serious strategic mistake but inevitable when it appears to be Treasury, not the Department of Energy and Climate Change, dictating energy policy."

The feed-in tariff is paid for through a levy on customer bills rather than by government coffers. The government partly justifies its decision on the basis that solar equipment prices have fallen.