Solar thermal schemes face subsidies threat

Solar panels which use the sun to heat water will no longer receive subsidies under plans unveiled by the Government.

The industry has reacted furiously to the move to do away with support for new solar thermal schemes from next year under the renewable heat incentive (RHI), which aims to boost the use of clean technology to provide heating and hot water.

It comes as the parliamentary Energy and Climate Change Committee warned that a series of changes already made to the Government's energy policy had "spooked" investors and could push up consumer bills by increasing the cost of new energy schemes.

In the consultation, the Government said solar thermal was paid the highest level of subsidies among the technologies in the RHI and that when questioned, half of those who had installed a unit said they would have put it in even without the payments.

As a result "solar thermal represents poor value for money for taxpayers", and as the technology was a mature one, supporting it through the RHI would not help build a supply chain in the way it could for newer technologies including heat pumps.

Paul Barwell, chief executive of the Solar Trade Association (STA) which represents an industry that has already been hit by cuts to solar electricity (PV) subsidies, said the proposal "simply doesn't make sense".

Solar thermal has negligible running costs, can be added to existing heating systems and does not need to be installed in a highly insulated house, making it good for helping tackle fuel poverty, the industry body said.

The STA also said the move came just as the technology was recovering from a slump in sales during a policy hiatus from 2010 to 2014.

Mr Barwell said: "The Government acknowledges the many benefits of solar thermal, yet proposes singling it out for the removal of financial support.

"With UK renewable heat deployment falling desperately behind target, Government should be full square behind this technology as part of a strategic plan to permanently bring down heating costs for British families.

"Discriminating against this globally important technology in the UK would send a terrible message to householders, and it would have very serious ramifications for the British solar thermal sector.

"Manufacturers of solar thermal equipment, including cylinder manufacturers as well as installers, risk a full-scale winding-up of their sector. We are urging Government to think again, particularly since sales inquiries are on the rise," he said.