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Can the government be trusted on solar subsidies?

Paul Hudson | 17:13 UK time, Thursday, 17 February 2011

The government have announced that they are to look at subsidies payable to large scale solar power farms that have started to spring up across the country.

The so called 'feed in tariffs' are the cash subsidies given to anyone who generates electricity by putting solar panels on their roof, and amounts to a generous 41.3p per Kilowatt hour.

Unsurprisingly, because of the generous level of subsidy available, the commercial sector has started to take advantage of the scheme.

In October planning permission was granted to the UK's first purpose built solar farm in Cornwall.

And planning permission has been sought for a 1MW solar farm in Lincolnshire, by green energy firm Ecotricity, of a likely cut in the level of subsidy.

The government are worried that the money set aside to fund the system of feed in tariffs will be used up by these large scale commercial solar farms, when one of the aims was to encourage individual households to generate green electricity.

Schemes which produce more than 50KW - which is around the output of 20 typical homes under the scheme - are likely to face a change to their tariffs, according to the Department of Energy and Climate Change.

Other European countries have already announced subsidy cuts.

Last year the German government decided to cut the level of subsidy available for solar power generation in their country.

And the Spanish government recently announced it too will cut the price guarantees on offer to solar power generation, first set out in 2007.

Such was the generosity of these Spanish subsidies, offering 10 times the average price for electricity in 2007, that it lead to a 'Spanish solar gold rush' as ordinary Spaniards piled into the sector - but now more than 50,000 Spanish solar entrepreneurs face financial disaster with a 30% reduction in the revenue that solar projects will be allowed to earn over the next 3 years.

The Spanish government made the controversial decision in December to cut the financial support offered to solar power generators as part of its ongoing austerity cuts.

Back here in the UK, the government announced recently that the whole Feed in Tariff scheme (FITS) is to undergo a comprehensive review.

With similar budgetary pressures, that renewable subsidies in general could be cut, which may make some people think again about investing in solar panels until the results of review are made public.

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