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End of UK subsidies for large-scale solar could kill ambitious expansion targets - industry

24 March 2015

The falling cost of solar panels has caused the UK  government to revise upwards its forecast for solar energy use, Energy Secretary Ed Davey said. The price of solar panels has reduced by 70% in the past few years leading to economies of scale that could result in solar providing up to 4% of the UK's electricity by the end of the decade.

Stock image
Stock image

This has prompted the government to withdraw subsidies from large-scale solar farms - above 5MW - from the end of March. But the solar industry said the cuts were a mistake and would prevent it from competing with fossil fuels.

The Solar Trades Association (STA) said as much new capacity has been installed in the first three months of this year as in the whole of 2014. But after April it expects installations to fall 80%, because of the end of subsidies.

The association's spokesman, Leonie Greene, said: "We need subsidies for another few years - maybe five - before we can compete with fossil fuels in the UK.

"Only 35% of the cost of solar is the price of the panels - the majority cost is the installation and that will only come down if we have a large and thriving competitive industry in the UK. The government's decision to pull out subsidies is an own goal - it will delay the moment when solar can compete with fossil fuels."

But Mr Davey said recent tenders for energy contracts among different types of renewable energy companies showed that solar was ready to compete already. Speaking to the BBC, he said he had been "amazed and delighted" by the plummeting costs of solar power.

He said he expected up to 14 gigawatts (GW) of solar by 2020 - up from 5GW at the end of 2014. That equates roughly to 1.5% of total UK annual electricity to just under 4%.

Under government plans subsidies for domestic solar will continue, but those for large-scale solar farms will not to ensure they do not swallow too much of the renewables budget. There are now 650,000 solar installations in the UK, including panels on homes.

The STA said the latest government target was now out of reach because of the change to the subsidy regime, let alone the original target of 20GW of solar by 2020, and that future uncertainty was affecting the industry deeply.

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