The UK Government is set to announce plans to reduce subsidies for household solar electricity this week — with fears the payments could be slashed by half.
Ministers have warned that feed-in tariffs, which pay people for the electricity they generate from small-scale renewables, must be cut for solar to reflect cost reductions in the technology and the economic situation.
Installations of solar photovoltaic panels have outstripped expectations and the government claims reductions in the subsidies, which are funded from consumer bills, are needed to ensure that the scheme is sustainable.
But the industry is warning large-scale cuts could seriously damage the sector and the thousands of jobs it now provides.
One company, HomeSun, says the provision of free solar panels to low-income and social housing families in schemes where the household sees a reduction in their bills due to the solar electricity generated and the company claims the subsidy would become commercially unviable if the rumoured cuts materialise.
Daniel Green, the company’s chief executive, said: “The current FITs programme has been a success – social inclusion for solar PV, job creation, and excitement about solutions to lower energy bills.
“And it has the potential to deliver the vision of solar on homes across the UK.
“But it looks like the Government is preparing to turn its back on jobs, enterprise and community, and give a big fat ‘tick’ to the lobby from big energy companies – all at a time when energy bills are rocketing.”
Alex Lockton, managing director of Wiltshire-based Freesource Energy warned that a December cut-off to register new installations for the old, bigger tariffs would lead to short-term chaos in the industry.
The industry has seen a major boost in installations in September as people scramble to get their solar panels up in time to qualify for the feed-in tariffs ahead of the Government announcement, and swirling rumours have added to the rush.
He said: “We are really nervous that customer demand could fall off a cliff once the deadline has passed.
“The likelihood of widespread redundancies being made across the industry in the run-up to Christmas is extremely high and many companies may struggle to keep redundancies below half their workforce.”
This week’s announcement comes after Energy Minister Greg Barker told a solar power conference he did not want to “kill off” solar tariffs but warned it needed to be reformed, and said households would have to meet energy efficiency standards to qualify for subsidies.
Andrew Lee, international sales manager at Sharp Solar, said: “We recognise the need to make this subsidy scheme more intelligent and effective but the benefits of the tariff are clear – around 25,000 people are now employed in this sector.
“By cutting the rates and alluding to vague suggestions around minimum energy efficiency requirements for homeowners looking to invest in solar PV, the Government risks doing irreparable damage to the sector.”
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Dr Doug Parr, chief scientific advisor at Greenpeace, said: “Tomorrow the Government will announce the future pricing structure of the feed in tariffs for solar energy.
“This is a critical moment for the UK’s growing clean energy sector. Slash support and David Cameron will be going back on the commitments he gave, with great fanfare, four years ago in the Greenpeace warehouse when he launched his energy policy paper Power to the People.
“He should stick to his own policies and keep the feed-in tariff at a rate which supports the growth of a sustainable solar power industry.”
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Friends of the Earth’s energy campaigner Donna Hume, said: “Clean energy is more popular than ever with households, businesses and community groups around the country cutting their bills by joining the solar energy revolution.
“The Government’s plans to axe solar incentives could kill a thriving industry and put tens of thousands of people out of work.
“Instead of making the solar subsidy more fair, the Government is ending support for anyone other than very rich people.
“Twelve thousand people have already urged David Cameron not to kill clean energy through Friends of the Earth’s Final Demand campaign – he must step in and sort out this mess.”