The UK Government last week confirmed new funding tariffs for large-scale Solar PV projects under its green electricity initiative, the Feed-In Tariff (“FiT”) scheme. From the 1 August 2011, new entrants for solar projects into the FiT scheme will receive amended tariffs amounting to up to a 70% cut to current levels of funding. Schemes under 50kW are unaffected by the changes.

According to Government sources, the changes are aimed at achieving a “sustained growth path for the solar industry”, although the announcement comes as a crushing blow to many within the UK’s fledgling solar industry who had pinned their hopes on continuing Government subsidy. A major review of renewable energy published last month by the Government’s advisory body on climate change – the Committee on Climate Change – noted the significant potential for solar PV generation in the UK, although its development is generally thought to have been hampered by the high costs associated with this technology.  

The FiT scheme was introduced in April 2010 and is one of the ways in which the UK proposes to meet its ambitious climate change and renewable energy targets. Under the scheme, financial incentives are provided for the generation of electricity and heat on a small-scale using renewable sources (known as microgeneration).  

Last week’s announcement followed a ‘fast-track’ review launched by the Government earlier in the year following initial evidence showing the number of large-scale solar projects in the planning system to be much higher than anticipated.  

A group of solar developers and investor organisations has been given permission to proceed with a Judicial Review action against the Secretary of State for Energy and Climate Change in relation to the handling of the review. A full hearing is expected before 29 July 2011, the outcome of which may have important implications for the solar industry in the near term future.