In a drive to cut the cost of renewables, the European Commission on Wednesday updated state aid guidelines to bring in competition for subsidies.
Under the new guidelines, community-scale solar and hydro schemes could be forced to compete with larger developments in the contract for difference (CfD) regime instead of receiving a feed-in tariff (FIT).
Nina Skorupska, chief executive of the Renewable Energy Association (REA), said: “Farmers, businesses and community groups have become important participants in the UK electricity supply thanks to the simplicity of the feed-in tariff. It has also enabled electricity-intensive companies to save money by supplying their own clean power. These new players in the energy mix are unlikely to be able to make new projects work under contracts for difference.”
The changes affect all renewable projects between 1MW and 5MW except for onshore wind, which conversely could see eligibility for FITs extended to 6MW.
The Solar Trade Association’s Leonie Green said it would leave a “policy void” for these medium-sized projects. With the Commission otherwise advocating technology-neutral competition, “it makes no sense at all” to discriminate against solar, she argued.
“This is an illogical decision by the Commission which shows unjustified technology bias, serves a big utility agenda and risks damaging one of the most cost-effective and biggest markets for solar across Europe.”
Earlier this year, government published its first ever Community Energy Strategy, which forecast up to 3GW of power generation could come from community schemes by 2020, or 1.4 per cent of demand.
The latest direction from Brussels could have “major implications” for this strategy, according to the REA.
Skorupska added: “We hope the government will be able to support this diversification in the energy mix through the state aid guidelines exemptions, not least so that it can fulfil its exciting new community energy ambitions.”