UK government unveils plans to cut renewable energy subsidies

The UK government yesterday unveiled wide-ranging plans to cut subsidies to the renewable energy sector, citing costs that were out of control and the need for consumer protection from soaring bills.

Commentators described the measures were more draconian than expected while Greenpeace argued it badly hurt investment and shred the credibility of David Cameron's government on tackling climate change.

While onshore wind farms, solar energy and power generated by biomass plants were earlier targeted, wood pellets and plants were are now in the main line of fire. Under the proposals the government is seeking to eliminate a guaranteed level of subsidy for coal-powered plants that were to be converted to green energy.

A consultation would also be initiated on the scale of subsidies for smaller solar power installations, which would include the option of removing aid for roof-top panels earlier than expected.

There would further be a review of another subsidy regime, the feed-in tariff – covering solar and wind power – which, according to ministers, would produce significant further savings.

According to energy and climate change secretary Amber Rudd the aim was to bring costs under control, while denying it would chase away investment.

She added, ''My priorities are clear. We need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way.

''Our support has driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies. We're taking action to protect consumers, whilst protecting existing investment''.

Meanwhile, the spiralling bill for renewable electricity, was now projected to hit £9.1 billion in 2020-21, an overrun of £1.5 billion. Households could end up footing the overrun which would add £20 to household energy bills.

Subsidies for ''small'' solar farms of below 5MW – up to the size of 15 football pitches – would be cut. About 250 such projects had been awaiting construction or seeking planning permission, according to an analysis by the Renewable Energy Foundation.

According to the energy department, a wider review of subsidies, including those for household solar panels – would take place this year.

''We can't have situation where industry has a blank cheque, and that cheque is paid for by people's bills,'' Rudd said.

''I'm going to ensure people's bills are kept down in terms of this extra subsidy for renewable energy,'' she told BBC Radio 4's Today programme.