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The government is to make significant changes to its financial support for solar farms, in a move condemned by green activists and renewable power companies as likely to reduce the UK's ability to generate low-carbon power and green jobs, and to increase dependency on imports of fossil fuels.

DECC insisted the changes were necessary in order to ensure subsidies were fair and that renewable energy targets would still be reached, while keeping down costs for consumers.

The UK currently has approximately 2.7GW of solar energy generation, enough to power approximately 620,000 homes. The government said its proposals would keep the UK on track for its new target of having 10 to 12GW of capacity in 2020 – which is a large decrease on estimates produced in 2012 by the Department of Energy and Climate Change that the UK could have 20GW of solar power by the end of the decade.

Large solar farms, above 5MW – enough to cover about 15 football pitches – will be hit the most. In the future these farms will be forced to compete with other sources of renewable energy such as onshore wind turbines and energy-from-waste plants, for a limited pot of available cash that is ultimately paid by energy consumers. But this system – known as "contracts for difference" under the government's electricity market reforms – is complex and offputting, according to solar companies, as well as creating uncertainty as to their future returns.

However there was some good news for smaller scale renewables. Community solar energy projects, with people clubbing together to put up Solar panels in their local area, will be allowed to double their size, from 5MW to 10MW, and people who choose to put solar panels on their roofs can expect a bigger share of the subsidy pot than farmers and other large property owners who choose ground-mounted models.

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