The cuts amount to an 87% overnight reduction in the subsidy solar power owners receive for the energy they sell back to the gird.
“From 1 January, ministers are proposing reducing the feed-in tariff for smaller scale solar installations from 12.47p per kilowatt hour to 1.63p with large standalone units eligible for subsidies of 1.03p per kWh, compared with 4.28p today”.*
Community solar energy projects rely on FiTs to pay back community shareholders over the life of the solar panels. The FiTs scheme provides a guarantee for community groups like CREW to develop robust financial models that work out the rate of return to pay back investors, and how much money we can contribute to a community benefit fund.
Everyone in the solar industry has been expecting a phased reduction over time in the level of subsidy available. That is the whole point of a subsidy regime – to support fledgling technologies and industries as they develop to the point where they can complete commercially independent of government support.
This announcement is far more severe than anyone was expecting and undermines the viability of all future solar projects in the UK.
CREW are committed to providing renewable energy to the people of Wandsworth. This month we were just about to register with the Financial Conduct Authority as a Community Benefit Society to provide additional reassurance to the community by legalising our structures to operate community share offers.
Until now the plan has been to use any additional financial proceeds gained through solar power generation to channel into further sustainable energy initiatives, discussed and decided by Wandsworth citizens.
We will watch events closely and no doubt adjust our actions to keep doing whatever work we can in the borough.