Tuesday 25th October 2016                 Change text size:

The UK’s renewable energy subsidies face cuts

The UK’s renewable energy subsidies face cuts

The coalition government made an effort to portray itself as green but Charlotte Reid asks whether that effort could be undone as renewable energy subsidies are under threat

It has been revealed that public subsidies for some renewable energy technologies are to be cut in response to complaints that ‘green taxes’ are increasing the cost of energy bills.

Overall the UK government has cut support for land-based and offshore wind farms but is increasing support for wave and tidal plants.

The solar panel industry had already braced itself for cuts to feed-in-tariffs (FiT), a scheme which has made more homeowners buy solar panels for their roofs. The FiT has been popular because it pays businesses, groups and individuals for generating their own green energy.

As a result of these changes the government is expecting to make savings of between £0.4bn and £1.3bn and say it should have less of an impact on consumer bills.

Chris Huhne, Secretary of State for Energy and Climate Change, said the changes were to do with increasing support for lesser known technologies, “We have studied how much subsidy different technologies need. Where new technologies desperately need help to reach the market, such as wave and tidal, we’re increasing support. But where market costs have come down or will come down, we’re reducing the subsidy.”

Arnaud Bouillé, director at Ernst & Young’s environmental finance team, says in The Guardian that the cuts were not unexpected. He says that the ‘biggest loser’ is the solar sector and that it, “may be a missed opportunity for a maturing industry which had achieved significant cost reductions in recent years.”

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