Subsidy cut vital to protect tariff scheme warns Minister

Climate Change and Energy Minister Greg Barker said: “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.

“The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FITs (feed-in tariffs) scheme.

“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”

His remarks came as the industry warned that cuts to subsidies announced yesterday could cost growth and jobs.

But the Department of Energy and Climate Change (Decc) warned that without action to control the situation solar electricity would be costing £980m – or £26 extra on the average household electricity bill – by 2014/2015.

Decc said average costs of solar photovoltaic (PV) installations to generate electricity had fallen by at least 30 per cent since the subsidies started, coming down from £13,000 last April to £9,000 now.

A surge in households installing solar PV saw 16,000 domestic arrays put in place in September, double the amount installed in June, as people scrambled to qualify for the subsidies ahead of the expected cut.

A Friends of the Earth spokeswoman said: “Greg Barker says he wants to make subsidies fairer – but the new rates mean that unless you have significant savings, you’re unlikely to be able to afford solar panels. The Government should be encouraging more people – not fewer – to save money by making their own electricity, freeing us from the stranglehold of the Big Six energy firms who are pushing up our bills.”

A Greenpeace spokeswoman added: “The renewable sector is one of this century’s critical growth industries, with the solar industry creating over 20,000 jobs in the last year alone.

“There’s a real inconsistency with the Government’s approach to job creation – on the day the Deputy PM Nick Clegg announced funding for 35,000 new jobs, the Treasury pulls the rug out from under this vibrant industry.

“Ministers are quite open about why funding is being cut, they admit the scheme to fund solar has been too successful.”