Chris Huhne will lead a review into the use of feed-in-tariffs (FITs) in the UK in a bid to end subsidies going to large scale solar farms rather than small scale users.
The Secretary of State for Climate Change acknowledged the successful take-up of photovoltaic panel in Britain so far since the FIT scheme began last year.
Since then 21,000 installations have been registered, with the majority of these apparently having domestic applications.
However Huhne highlighted his concerns that the subsidies were making their way into the pockets of big businesses rather than to small scale users.
“I have become increasingly concerned about the prospect of large scale solar PV projects under FITs, which was not fully anticipated in the original scheme and could, if left unchecked, take a disproportionate amount of available funding or even break the cap on total funding,” said Huhne.
“Several large solar installations have already received planning permission. Industry projections indicate there could be many more in the planning system.”
Huhne thinks a procedural review may be necessary to address a number of problems.
“In light of this uncertainty and the risk that such schemes could push FITs uptake off trajectory and may make the Spending Review savings difficult, I have decided to end the potential for damaging speculation and bring forward the review of the Scheme to look at ways of correcting these early teething problems.”
“I recognise that industry needs a long term plan for investment in which it can have full confidence,” he continued.
“Today I am announcing a comprehensive evidence based review in to the FITs scheme and, to provide further certainty to the renewables industry, I can confirm that we also hope to publish next month measures to support renewable heat within the envelope agreed at Spending Review."
The review of FITs will be completed by the end of the year, with tariffs remaining unchanged until April 2012, unless there is specific need for greater urgency.
Some say Huhne may be rather hasty in tinkering with FITs, including Ash Sharma, Research Director at IMS Research.
Talking to TechEye, Sharma says: “While it may mean that installation demand is pulled forward, with many businesses seeking to invest before any changes are implemented, in the long term it may damage both the commercial and residential markets rather than provide any benefits.”
“The government are perhaps concerned that the market may take off to quickly, alongside of course wanting to save money, but this may be too early in the UK market’s growth. In fact the British market was only around one percent the size of the German one last year, having only had a subsidy programme for eight months.”
Furthermore, the UK is likely to fall even further behind other EU countries.
“We are way behind Germany of course, but we are also falling a long way behind many other countries such as Italy, France, Belgium, Greece and more.”
“This could in fact have a negative effect on the economy rather than helping it, with jobs for installations and distributors going if there is no demand for panels due to unattractive prices.”
“For example if the big businesses are not attracted to countries large scale solar plants then that will have a knock on effect on many others area, such as making component prices more expensive for residential users, which of course consequently means that there is less demand to have panels installed.”