The Government is undermining confidence in energy policy and hurting the UK solar industry by rushing through panicked changes to Feed-in Tariffs (FiTs) without adequate notice to consumers and installers alike, according to a new report by MPs on two influential select committees.

Tim Yeo MP, Chairman of the Energy and Climate Change Committee, said: "There is no question that solar subsidies needed to be urgently reduced, but the Government has handled this clumsily.

"Ministers should have spotted the solar gold rush much earlier. That way subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry."

Plans to require homes to meet a 'C' rated energy efficiency standard before they can receive solar FiTs will limit access to wealthier households and could have a ‘fatal impact’ on the industry, the MPs warn. Eighty six per cent of homes would need to be better insulated before they could qualify for the scheme under the Government’s proposals – increasing up-front costs for homeowners by £5,600 to £14,000, even before the panels are purchased.

-- Advertisement --

Joan Walley MP, Chair of the Environmental Audit Committee added: "It doesn't make economic sense to let the sun go down on the solar industry in the UK. As well as helping to cut carbon emissions, every panel that is installed brings in VAT for the Government and every company that benefits from the support is keeping people in work.

"The Government is right to encourage people to focus on saving energy before fitting solar panels, but these proposals will require most households to spend thousands of pounds on extra insulation before they even purchase the panels."

Rising energy bills and the falling cost of solar panels made the original FiT rates so attractive that tens of thousands of households, companies and community groups have installed photo-voltaic (PV) systems since the scheme was introduced last year. The Government had evidence that solar panel prices were falling significantly as early as March 2011 but Ministers did not act to stem rocketing levels of small scale solar installations until the end of October.

The Government has proposed an even lower tariff (80 per cent of the new rate) for generators who have more than one solar system registered for FiTs, in recognition of the economics of scale such aggregated schemes can achieve. This will reduce the viability of ‘rent a roof’ business models and will also have an adverse impact on community solar projects, which depend more acutely on the tariff income to finance installations. This could have a disproportionate impact on disadvantaged and poorer communities for whom such schemes are a good way of accessing the benefits of renewable energy and reducing electricity costs.

(CD/GK)