In a leaked email seen by the Telegraph, Cabinet Office Minister, Oliver Letwin, spoke of Government’s desire to phase out subsidies for both solar PV and onshore wind by 2020 because both technologies should reach grid-parity before the end of the decade.
Letwin’s email, sent to the President of the Dorset branch of the Campaign for the Protection (CPRE), Terry Stewart, explained: “I anticipate that subsidies for both solar photovoltaic and onshore wind will come down to zero over the next few years and should have disappeared by 2020, both of these forms of energy are gradually becoming economic without the need for subsidies.”
The news that Government subsidies for solar and wind will ‘disappear’ by 2020 points to a bright future for the wider clean-tech industry. Those in the renewable industry, especially the solar industry, have welcomed the recognition that solar and wind have the capability of competing with traditional fossil fuels without subsidy.
Government’s marked change in the viewing of solar PV is particularly heartening after the Department of Energy and Climate Change failed to even include the technology in its Renewable Energy Road Map. Since then, the UK solar industry has grown into a significant force and the Minister’s admission of its potential to reach grid-parity by 2020 acts as yet another reminder as to its important role in future energy generation.
In a recent interview with the Financial Times, the Secretary of Energy and Climate Change, Ed Davey, spoke of the importance of policy stability if the UK is to attract the required green investment.
Davey said: “If we send signals to investors and to companies that we’ll play fast and loose, and we won’t go where the evidence is, we won’t stick to our word, what will happen? The cost of capital for investment in the UK will go up so there will be a political risk premium.”
The Lib Dem MP was making a thinly-veiled reference to George Osborne and a handful of Conservative MPs who have demanded for a greater reduction to level of wind subsidy. However, Davey has made clear that if we are to end renewable subsidies then the technology will have to subsidised in the short-term to drive innovation.
Davey added: “We absolutely have to be green in this Government, and being green means being straight with investors and companies and not messing them around.”
Reacting to the news that solar and wind subsidies could be cut by 2020, a spokesperson for DECC explained that: “It is always our aspiration to end subsidies for any energies.”