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The future for small-scale renewable power projects has been thrown into doubt by changes to European state aid rules, industry leaders have claimed.

Last week the European Commission changed its guidance on state aid for renewable energy, changing the rules to require project developers to bid for government support through a competitive process, rather than receiving support through fixed subsidies.

Brussels believes this will continue to incentivise the development of renewable power projects, but at a lower cost to the taxpayer.

The move will not impact on existing subsidy schemes in the UK, such as the small-scale renewable feed-in-tariff scheme or the Renewables Obligation, but will apply to any new forms of support put in place by the government

Launching the new guidelines, Joaquin Almunia, vice president of the European Commission, said current support mechanisms had led to 鈥渟ignificant cost increases for electricity users鈥� and had 鈥渟heltered renewables producers from risk鈥�.

He said the new rules, which apply between 2014 and 2020, would 鈥渆nsure renewables support is sustainable by gradually integrating renewables into the market鈥�.

But Alexandre Roesch, head of regulatory affairs at the European Photovoltaic Industry Association, said that any competitive bidding process 鈥渋nevitably comes along with risks and transaction costs鈥� that made it unsuitable for smaller-scale renewable electricity projects.

He said: 鈥淐ooperatives and community projects, for instance, will now be forced to place their bids in a scheme much more suited to the largest energy players.鈥�

Nina Skorupska, chief executive of the Renewable Energy Association, warned the policy was a 鈥渓eap into the unknown鈥�.

She said: 鈥淧olicies which pay developers a fixed price for their power have been shown to work and deliver a major increase in renewable electricity - up to 15% last year.

鈥淭hese new guidelines are based on economic modeling which suggests that competitive mechanisms will deliver equally good results at lower cost to the consumer.

鈥淲e support measures to reduce policy costs as renewables continue their journey towards price parity with fossil fuels.

鈥淏ut putting so much faith in untested theory is a big risk, especially when the UK is in such desperate need of new capacity.鈥�