Environmental Laboratory

  • Is the Cutting of Subsidies Necessarily a Bad Thing for the Solar Power Industry?

Is the Cutting of Subsidies Necessarily a Bad Thing for the Solar Power Industry?

Sep 10 2015

At the tail end of last month, the Conservative government announced plans to slash their subsidies into green energy, meaning that people who install solar panels on the roofs of their homes will receive as much as 90% less money than before.

Environmentalists, liberals and opponents of the government have been in outcry, claiming that such measures will put the solar power movement into jeopardy, especially at a time when EU climate ministers are calling for member states to clean up their act with regards to renewable energy production.

But is the announcement actually a blessing in disguise for the future of clean energy in the UK? And if so, how?

Competition Breeds Popularity

Taking other countries where subsidies have been cut on green power as an example, it’s not unfeasible to think that the solar panel industry could actually benefit from the proposed cuts. For instance, Germany has long had a history of being at the forefront of innovative and forward-thinking energy production. After heavy governmental investment in solar power at the outset, Angela Merkel’s party have been steadily cutting subsidies over the last few years to the point where they are not at a fraction of what they once were.

Has the solar power industry floundered in Germany? In fact, quite the reverse is true. This is because the reduction in governmental help has increased competition among solar power companies, leading to more standardised, improved services and cheaper costs for the homeowner.

It’s entirely possible a similar trend could occur in Britain. With the cost of installing panels having fallen by as much as 80% since 2010, the switch to green power is no longer the massive undertaking it once was. And once the subsidies are removed, solar power companies will have no choice but to reduce their costs even further in order to stay competitive, which could open them up to a whole new market.

Rather than just eco-warriors and environmentally-conscious thinkers installing solar panels on their roof or those who are just looking to take advantage of a helping hand from the government, cheaper, more competitive solar panel energy could be the future of energy production for all. Surely, such a scenario is the most desirable outcome for everyone.

Solar Power Around the Globe

Of course, reducing subsidies will only lead to increased competition and cheaper prices once the technology has been initially established in a country and accepted as a viable alternative by its populace. Therefore, in those countries which have not yet explored it thoroughly as a means of energy production, governmental subsidies will still be required for the foreseeable future. Even so, the amount of investment needed will still be far smaller than the £3.45 trillion spent annually on fossil fuel subsidies around the globe.

Yet in countries such as Britain, India and Australia, where solar power is a fledgling but accepted industry, the need for subsidies is no longer as high and in fact could be impeding its further progress. Hopefully, if the proposed governmental cuts do come to pass, the UK can follow the German example and prove there is value – both financial and environmental – solar power, with or without subsidies.

Image Source: Elliott Brown

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