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Feed-in Tariff cuts dent confidence

The government’s adjustments to payments within the Feed-in Tariff by the government have met a mixed reaction from the industry.

As expected, the announcement confirmed the incentives for new larger-scale solar power projects are being slashed.

This resulted from ministerial concerns that commercial “solar farms” would be the main beneficiaries, following more planning applications for large scale schemes being submitted than expected.

Although energy and climate change minister Greg Barker (pictured) said the subsidy cut was needed to prevent the system becoming “overwhelmed”, the government also hopes the change will save £40 million.

This amounts to a 10 per cent reduction in costs and means that tariffs for larger projects have been reduced from 30p to 8.5p per unit of electricity produced.

The tariff cut has raised fears that schemes for communities, schools and social housing may no longer be economically viable.

The UK District Energy Association warned that the reduced tariffs would harm industry confidence. “These relatively rapid changes have served to remind industry that no government support mechanism is without political risk,” it said.

While recognising the need to control spending, the association blamed the “short-term review” for significantly damaging investor confidence in low carbon technologies.

Simon Woodward, UKDEA chairman, said: “Work needs to be done to improve industry and investor confidence in the Government’s support mechanisms for low carbon development.

“We are lobbying DECC to allow for appropriate grace-periods as part of support level reviews, to ensure that investment continues apace in low-carbon energy and that industry doesn’t ‘wait and see’ every time a review occurs.”

The changes were seen as largely positive by Keith Marshall, chief executive of SummitSkills, but he warned of rogue trader involvement.

“An increase in smaller domestic opportunities will provide the industry with more chances to compete for and showcase environmental technology installation,” he said.

“The key challenge will be to make sure that the right people with the right skills do the jobs. With a boost in demand, the likelihood of increasing numbers of rogue traders is high.

“It is vital the public can be sure of an engineer’s competence,” said Mr Marshall.