As expected, the government announced in June cuts to the subsidies given to large-scale solar photovoltaic installations.

The cuts were introduced in a bid to ensure that the money assigned to the feed-in tariffs (FiTs) programme for the period of the current parliament didn’t get quickly eaten up by large investor-driven solar systems, leaving nothing for householders and small community projects.

The government line  is that the issue will be explored during the comprehensive review of the feed-in tariffs, which is already underway. The initial tariff rates were always intended to last only until April 2012, and from that date the rates can be tweaked downwards to ensure that the scheme doesn’t exceed its spending cap.

The solar PV industry suggest  that small and medium-sized systems are going up so fast that virtually the entire budget for the feed-in tariffs could be used by the middle of 2012.

The implication for anyone thinking of installing solar at home over the next few years is clear: do it now or risk getting locked out. The message for the solar industry is even starker: be prepared for the possibility that Fits money could dry up completely or almost completely much sooner than thought.

The cap was introduced by the current Government as part of last year’s government-wide spending review. (The scheme is actually funded by a levy on electricity bills rather than directly from the expenditure of the Department for Energy and Climate Change (DECC), but it’s still considered a form of tax and spending, and therefore was reviewed along with the rest of government expenditure.) The government line is that a £900m budget was allocated to the Fits when Labour originally set up the scheme in 2010, and all the coalition did  was to trim 10%from the part of that budget intended for 2014-15 – a modest concession in the context of much deeper cuts in other areas.

DECC are  to reappraise solar in light of developments in cost and technology, and to think creatively about “new pathways” for supporting large-scale solar projects. If the Fits budget does run out sooner than expected, the same team may also find themselves brainstorming new ways to support domestic-scale solar, too – unless additional cash can be found.

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