Britain likely to cut solar power support

LONDON Mon Feb 7, 2011 1:37pm GMT

LONDON (Reuters) - Britain said on Monday it would cut support for large solar power plants before the summer and all installations from April 2012, if a review showed subsidies were driving too rapid uptake, as expected.

Britain launched last April a price premium for electricity generated from small-scale renewable sources, called a feed-in tariff (FIT), but the government is now concerned big installations may mop up money meant for homes and communities.

The scheme supports projects up to 5 megawatts, and the government in October capped support at 360 million pounds ($579.6 million) through 2014.

It is now expected to roll back tariff rates for solar, which receives more generous support compared with other green energy technologies.

Germany has the world's biggest solar market and recently speeded up subsidy cuts, called "degression" following a massive uptake which is pushing up wider, retail electricity prices.

"I'm interested in moving to the German model where 'degression' is based on (speed of) deployment," Greg Barker, minister of state for energy and climate change, said in a telephone interview.

The government would fast-track a review of how quickly installers were deploying big solar projects, and if shown to be too fast would implement cuts before the summer, Barker added.

The government would conduct a wider review of the speed of deployment of all solar power projects, anticipating possible tariff changes in April 2012. The reviews may create a gold rush as installers race to grab higher tariff rates.

"This will create a little more uncertainty for businesses," said Roman Webber at advisory firm Deloitte.

"People who are looking at advanced schemes will try to accelerate the pace of their projects, and others with projects at earlier stages will think twice about building anything until the review is done."

Meanwhile the department for energy and climate change (DECC) said the uptake had been too slow of Anaerobic Digestion (AD) plants, which produce methane from fermented organic matter.

DECC would fast-track a review which would likely see an increase in tariff rates before the summer, said Barker.

DECC said it would announce rates of support for renewable heat next month. Barker would not comment on whether the rates would be above or below those announced by the previous government in February 2010.

(Reporting by Gerard Wynn and Daniel Fineren; additional reporting by Karolin Schaps; editing by William Hardy and James Jukwey)

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