July 27, 2011 / 12:55 PM / 9 years ago

UK government to plug solar tariff loophole

LONDON (Reuters) - The British government plans to plug a loophole in its support scheme for solar power plants which would have allowed producers to benefit from higher tariffs for large-scale plants which the government intends to curb.

A wind turbine is pictured at Loftsome Bridge Treatment Works, in front of Drax Power Station near Selby, northern England, June 19, 2008. REUTERS/Nigel Roddis

The Department of Energy and Climate Change announced on Wednesday it intends to change a clause on solar plant extensions from October 31, 2011 to prevent developers from snapping up higher tariffs for projects of commercial size.

Initial policy allowed solar plant developers who benefited from feed-in tariffs (FITs) set before the government’s fast-track review announced last month to continue receiving pre-review support on project extensions built within 12 months of the review start date of August 1, 2011.

“These provisions effectively create a loophole which, if it were to remain open, would have a considerable impact on the FITs spending envelope and the integrity of the scheme, undermining the intended effect of the fast-track review,” the department said in its consultation document.

The government now plans to change the clause so that tariffs for extensions to existing projects will count as a separate project from their date of commissioning, rather than an extension benefiting from the original construction’s tariffs.

“A number of large-scale solar PV (photovoltaic) developers are contemplating using the FITs extensions rules to continue to obtain the existing tariffs for new generating capacity beyond August 1,” the government said.

The consultation period on the clause change is open until August 31, 2011 and the government intends to implement the change in September in time for it to take effect from the end of October.

Britain cut its support scheme for large-scale solar projects between 40-70 percent last month, fast-tracking a review which was only expected in April 2012.

The government voiced concerns that commercial-scale projects were snapping up funding which was intended for household and community projects instead.

Britain’s solar industry was shocked by the early cuts to the support program, saying they would cripple an industry in early development phase.

Reporting by Karolin Schaps; editing by Keiron Henderson

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