Market conditions

U.K. Said to Plan Cuts to Solar Subsidy at Predictable Intervals

The U.K. government will announce as early as next week plans to reduce subsidies for solar energy at routine intervals as part of an effort to curb a boom in installations, a person familiar with the plan said.

 

The plan will include a mechanism called a deployment trigger that automatically cuts above-market rates paid for power from solar cells once installations reach a predetermined level, said the person, who declined to be identified before the official announcement.

 

Energy Secretary Chris Huhne has said choking off support for the solar industry is necessary to keep a lid on prices charged to electricity customers, who pay incentives for solar energy in the form of a feed-in tariff guaranteeing the premium prices. With panel prices down more than 47 percent from a year ago, Huhne says lower subsidies are needed.

 

Britain’s proposal is similar to one in Germany, the world’s largest solar market, which reevaluates support every six months. German Environment Minister Norbert Roettgen wants those cuts to come more frequently and is seeking to phase out subsidies by 2017.

 

The U.K. program is designed to give solar developers more clarity about the levels of support they can depend on and exactly when the government will make changes. The current system started in April 2010. It spurred a 10-fold increase in solar installations last year and decisions by the government in August and October to scale back incentives.

 

The government next week is planning to issue a consultation document setting out its proposals. It’s already seeking to cut in half support levels for small solar systems fixed to rooftops, though two courts ruled that ministers acted unlawfully in ordering the reduction before a consultation with industry was finished.

 

Ministers said last week they may seek permission to appeal to Britain’s Supreme Court.

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