Consumers face paying millions too much for solar farms as subsidies are too high

Consumers to pay 10 per cent too much for solar farms as subsidies ‘too high’

Energy consumers to pay millions of pounds too much for solar farms after government sets subsidies too high

Emily Gosden By Emily Gosden, Energy Editor4:02PM GMT 04 Dec 2013 CommentsComments

Consumers face paying millions of pounds too much for solar farms after ministers handed the industry subsidies 10 per cent higher than it had asked for.

Industry body the Solar Trade Association said on Wednesday it “can’t understand why” ministers rejected its suggestion to cut subsidies further – reducing the cost of ‘green levies’ on consumer energy bills.

“From 2016 to 2019 [the subsidies] are actually higher than we asked for,” the Solar Trade Association (STA) said.

The Department of Energy and Climate Change set out plans to guarantee new solar farms built in 2017-18 a price of £110 for every ‘megawatt-hour’ (MWh) unit of power they generate – about twice the current market price.

The figure was £5 less than it had initially offered in draft plans, but the industry said it was still unnecessarily generous.

But the STA said it had told the government it only needed £99/MWh in 2017-18 – meaning DECC’s proposals will leave consumer paying 10 per cent too much.

Subsidies for 2018-19 were 9 per cent more generous than the industry had asked for while those for 2016-17 were 4 per cent too high.

The solar subsidies set out on Wednesday are separate from “social” levies, some of which will be paid for out of general taxation under plans to be announced by George Osborne on Thursday to cut £50 from the average household energy bill.
Unlike these levies, solar subsidies, along with those for wind farms and other green technologies, are expected to continue to be paid for through household energy bills.

The STA said that it had sought a price of £91/MWh for 2018-19, which would have been lower than the £92.50/MWh offered to Britain’s first new nuclear plant in a generation.

Instead, solar farms were offered £100/MWh that year. “Perhaps DECC have sought to spare nuclear’s blushes by giving us a higher strike price than them, when we could have gone lower,” STA chief executive Paul Barwell said.

The STA said that the subsidies on offer for projects starting up in 2014-15 and 2015-16 were too low, however.

DECC has set the price at £120/MWh for those years when the industry claims it needs £140 and £133 respectively, because an EU trade war with China is artificially forcing up the cost of solar panels in those years.

A DECC spokesperson said: “The strike prices for each technology have been set to meet the government’s objectives and to reflect the expected costs of deployment for different technologies.”

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