Britain to end solar power subsidy scheme early

Solar panels are seen in fields near Andover in southern England May 3, 2013. REUTERS/Toby Melville

By Susanna Twidale

LONDON (Reuters) - Britain will end its subsides for new solar power plants two years earlier than expected to prevent costs from the scheme soaring, the government said on Tuesday.

Energy companies who build solar farms currently qualify for subsidies through the government's so-called 'Renewable Obligation' (RO) scheme, and had expected to keep receiving these until 2017.

Under the plans announced by the Department for Energy and Climate Change (DECC) the scheme will be closed to new solar projects over 5 megawatts (MW) from April 1 2015.

"Large scale deploying much faster than previously expected," DECC said in a statement, adding that as a result the cost of subsidising the technology was rising faster than originally planned.

The government gave no details on how much has already been awarded to solar power producers under the scheme.

DECC said it needed to halt the solar subsidies to make sure there is sufficient cash to support other types of renewable technology and to keep a lid on consumer bills.

Renewable power developer Good Energy called the decision "disappointing" and said it would harm investment in the sector.

"This decision will bring further instability and uncertainty to investors, and we will have to reconsider our portfolio of investments as a result," CEO Juliet Davenport said in an emailed statement.

The government had expected around 2.4-4 gigawatts (GW) of solar power capacity to be funded by the scheme by the end of the decade but said current forecasts show more than 5 GW could be deployed by 2017.

Solar projects will still be able to apply for Britain's new contracts-for-difference scheme which gives renewable power generators certainty of a minimum electricity price over 15 years.

However this subsidy is likely to be harder to win as the total amount available is capped and projects will be forced to compete with each other on cost to win the contracts.

Britain has a target to produce 15 percent of its energy, including electricity, heat and transport, from renewable sources by 2020 in a bid to cut climate-warming emissions.

(Reporting By Susanna Twidale; editing by Susan Thomas)

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