Young industries such as the renewable energy sectors rely heavily on government funding and incentives to help them achieve a level of competition with the well-established industries out there.
The incentives are only needed for a few years to give the young industry time to find its feet and develop the necessary technologies and scale of production to fully support itself. UK government ministers have recently angered the solar industry with proposals that will see incentives cut by 35 percent; significantly lower than other renewable energies and a level that some believe will send the sector into contraction. Howard Johns from the Solar Trade Association went as far as to Tweet that the government had announced “ambitious new plans for destroying the UK solar industry.”
The government have said that the incentive cuts will depend on the number of installations made between now and 3rd April. They have also stated further cuts planned for later in the year. “For solar PV we propose a tariff reduction in October (i.e. three months after the 1 July tariff changes) of 5 per cent, followed by a digression rate of 10 per cent every six months”.
The government is hoping that this deadline for the incentives will cause a surge in solar installations as more people try to take advantage of the subsidies before they are cut. The government are not looking to damage the solar industry, they are merely looking at different ways in which to help it develop. The incentive cuts are a negative aspect of their new approach, but they are also going to supply new feed in tariffs amongst other reforms that they predict will encourage the UK solar capacity to increase from 1GW currently to 22GW by 2020.
Climate Minister Greg Baker has insisted that the government are looking at a number of options, but that the falling costs in the solar industry ensure that it can continue to flourish once any reforms come into effect.
The government also plan wide ranging reforms to feed in tariffs for other renewable technologies such as, small scale wind, hydro and combined heat and power.