From the TUC

‘Green crap’ Tories ban solar and wind energy subsidies

22 Jul 2015, by in Environment

That massive solar power subsidy the Tories want to cut? It costs the average consumer £10 per year on annual electricity and gas bills of £1,338 per year. There is no pledge in the Conservative manifesto to cut support for solar power – but they must have known this was coming. The Energy secretary is using the spurious argument that “we need to keep bills as low as possible for hardworking families” to justify her decision.

Solar on energy bills picThe cut will chill jobs and investment. Industry body the Solar Trade Association (STA) says today’s announcements will prove “a real blow to investor confidence… solar farms are a very cost-effective ways of generating solar power.”

Meanwhile, the Treasury is providing £750 million a year in tax breaks to North Sea oil and gas. This, of course, doesn’t feature on consumers’ bills.

As was widely expected Energy Secretary Amber Rudd has launched a consultation on proposals to stop solar farms with less than 5MW of capacity accessing the Renewables Obligation (RO) subsidy scheme from April 2016.

Most likely, the government will seek to amend clause 59 of the Energy Bill now before parliament to add solar power to its ban on onshore wind subsidy.

The announcements are meant to deal with projected over allocation of renewable energy subsidies through George Osborne’s Levy Control Framework (LCF).

The consultation argues that solar projects are stretching the subsidy budget. The government predicts recent reductions in solar costs will allow the sector to succeed without support and suggesting that future projects could be “overcompensated at current levels of support.”

But according to BusinessGreen, this is a charge rejected by much of the solar industry, which maintains that a degree of support (let’s call it policy certainty) needs to be retained if it is to deliver true cost competitiveness without subsidy by around 2020. Leonie Greene of the Solar Trade Association argued a further £1.70 on bills would get the industry to a point where it could operate without subsidies.

However, more generally, low wholesale gas prices are driving bills down. British Gas has just announced a cut in customers’ bills, and other major providers are expected to follow suit. Yet the Treasury is demanding cuts in clean energy levies because, they say, bills are unaffordable.

From any common-sense point of view it’s sensible to invest in clean energy when energy costs are fairly low and interest rates on money borrowed are also low. These are indeed ideal times for consumers and investors to jointly support the growth of renewable energy. To put energy bills in perspective, British Gas’s 5% price cut has more than wiped out the impact of ‘green crap’.