Solar subsidy cut 'halts projects'

Feb 1 2012

Renewable energy projects have been shelved because of uncertainty about energy market reform and a controversial decision to cut subsidies for home solar panels, Energy Minister Fergus Ewing has said.

Mr Ewing told Holyrood's Energy Committee that the uncertainty has resulted in pre-approved renewables projects being put on hold.

He also said the UK Government's fight to reduce feed-in tariff subsidies (FITs), payments made to households and communities which generate green electricity through solar panels, has also resulted in "major projects" being delayed.

Energy Secretary Chris Huhne has pledged to fight on after losing a bid in the Court of Appeal to reduce FITs on any installations completed after December 12 last year.

Mr Ewing said he has urged Mr Huhne to make an exception for solar projects in social housing. He said: "I have particularly urged Chris Huhne to consider the case for social housing and the work being done by housing associations in Scotland along with industry to apply solar PV (photovoltaics) to social housing in Scotland.

"I think that was more complicated work. I understand from the meetings that I've had, and the very detailed discussions that I've had with a number of companies, that quite major projects were being contemplated in Scotland. It would be very sad indeed if those very useful projects for the most vulnerable in Scotland, or amongst the most vulnerable, cannot go ahead because of this."

Mr Ewing said he is also concerned about the "investment hiatus" among companies awaiting the outcome of the UK Government's energy market reform programme.

He said: "I think it is just a matter of fact, it's not a political point, to say that as long as these matters are unresolved then it's impossible for many investors to decide whether to invest. Before they can be expected to invests hundreds, or thousands, of millions of pounds investors need to know what the ground rules are. That's a statement of the blindingly obvious.

"The changes now which are contemplated are the biggest changes since electricity privatisation, and rightly they must be considered very carefully. But the longer it takes to reach a decision, the longer the investment uncertainty, I would suggest, is there."

He added: "It should be mentioned that in relation to the FIT tariff, other sectors are feeling an impact. The hydro sector, I think, is experiencing a delay in resolving the FIT tariff, so the delay in publication of the proposed revised tariffs for other technologies is having a negative impact on a number of projects."