Subsidy cuts could kill solar industry, ministers are warned

Sharp cuts in solar power subsidies for homeowners threaten to strangle the solar industry at birth and cost tens of thousands of jobs, Labour and renewables experts warned yesterday.

Under proposed changes the government will cut the "feed-in tariff" - the amount paid for energy that homeowners sell back into the grid - by over 50%.

Renewable industry experts and campaigners accused the Treasury of failing to recognise the economic growth that green energy investments could deliver, and said the proposed cuts - the third change in less than a year - undermined confidence across the green energy industry.

The shadow energy secretary, Caroline Flint, said the solar industry only employed 3,000 people in 450 firms last year but that figure had since risen to 25,000 jobs in 3,000 businesses. "With growth flatlining everywhere else, today's announcement actually threatens to strangle at birth the solar industry," she said. It was, she added, a "kick in the teeth for all those families who want to do the right thing by investing in solar".

Businesses accepted that the falling cost of solar photovoltaic panels should be reflected in falling subsidies, but argue that the size of the cuts would have a devastating impact on the number of installations.

"Such deep cuts would kill the UK solar industry stone dead," said Howard Johns, of the industry's Cut Don't Kill campaign and managing director of Southern Solar. "Our message to (the) government is cut us, but don't kill us. We want a sustainable cut that would allow us to survive and deliver the green growth that David Cameron said he was committed to."

Gaynor Hartnell, chief executive of the Renewable Energy Association, said: "These changes undermine confidence across all energy-related investments."

The energy and climate change minister, Greg Barker, defended the cuts as unavoidable if the system of feed-in tariffs for low-carbon and sustainable energy was not to be undermined by ballooning budgets. "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," he said.

The tariff paid to householders falls from 43.3p per kilowatt hour of solar electricity to just 21p under the consultation. The Department of Energy and Climate Change said there had been three times more solar installations than it predicted since the scheme began on April 2010, while the cost of an average home installation had fallen by at least 30%.