(Bloomberg) — The U.K. proposed to end an assistance

program for small-scale renewable energy projects as part of a

drive to cut the costs to consumers of subsidizing clean

technologies.

Ministers plan to cut subsidies by as much as 87 percent

from January and cap the budget for assistance, ending the

program for new entrants after March 2019, according to the

proposals outlined Thursday on the Department of Energy and

Climate Change website. If it isn’t possible to rein in

spending, the program of guaranteed electricity prices, known as

feed-in tariffs, may close in January, it said.

The tariff program “has exceeded all renewable energy

deployment expectations,” the government said. “However, this

deployment success has also come with costs exceeding our

projections.”

The announcement is a blow to the solar industry, which

accounts for more than four-fifths of all installations under

the program, according to Bloomberg calculations. Energy

Secretary Amber Rudd has ended or reduced a slew of clean energy

programs since her Conservative Party won the general election

in May, saying her actions are designed to protect consumers who

pay for the subsidies on gas and power bills.

‘Hugely Damaging’

Thursday’s proposals “would be hugely damaging for the

U.K. solar industry,” said Mike Landy, head of policy at the

Solar Trade Association. “Proposals to suddenly cut tariffs

combined with the threat of closure of the scheme next January

will spark a massive market rush. This is the antithesis of a

sensible policy for achieving better public value for money.”

The program has led to the installation of at least 3.3

gigawatts of small-scale renewable power capacity since it

started in 2010, 83 percent of it solar, the calculations show.

Last year, it cost consumers 850 million pounds ($1.3 billion)

in subsidies, up from 650 million pounds a year earlier.

The Treasury sets annual spending caps on clean-energy

assistance programs that rise from 4.3 billion pounds this tax

year to 7.6 billion pounds in 2020-2021. The government projects

actual spending to reach 9.1 billion pounds by 2021, an overrun

that only just falls inside the 20 percent headroom provided to

allow for shifting costs.

Thursday’s proposals would limit spending on new projects

through March 2019 to 75 million pounds to 100 million pounds.

That would allow for 82,000 new solar panel installations,

mostly rooftop, between now and the closure, according to the

energy department. It may also allow for 7,400 new small wind

projects, 920 hydropower plants and 70 anaerobic digestion

installations.

Smallest Projects

The plan would cut subsidies in January for the smallest

solar projects to 1.63 pence per kilowatt-hour from 12.47 pence.

Wind and hydropower rates would also be cut, with no reduction

for the rate paid to anaerobic digestion plants. The government

proposed a new formula for quarterly “degression” to reduce

assistance as costs come down and deployment rises.

“The proposed cuts mean that installing solar panels at

home will no longer be attractive to British families,” Good

Energy Group Plc Chief Executive Officer Juliet Davenport said

in an e-mailed statement.

The proposals are subject to a public consultation that

ends on Oct. 23.

“If cost-control measures are not implemented or effective

in ensuring that expenditure under the scheme is affordable and

sustainable, government proposes that the only alternative would

be to end generation tariffs for new applicants as soon as

legislatively possible, which we expect to be January 2016,”

the department said.

To contact the reporter on this story:

Alex Morales in London at

amorales2@bloomberg.net

To contact the editors responsible for this story:

Reed Landberg at

landberg@bloomberg.net

Randall Hackley, Sarah McGregor