THE Government yesterday defended plans to further cut the subsidy available to households installing solar panels despite fears the move will spark local job losses.
Ministers are pressing ahead with an already-planned halving of payments for panels installed from March, though court action may see the subsidy cut backdated to December.
That will be followed by further cuts in July, with ministers saying subsequent six-monthly reductions will reflect falls in costs.
The announcement comes despite warnings that jobs at Carillion Energy Services, formerly Eaga, based in Newcastle, are at risk.
Last December, the company put 4,500 employees on notice of redundancy – and yesterday warned restructuring at the firm was ongoing given the Government’s announcement.
A Carillion Energy spokesman welcomed parts of the announcement, such as easing rules on how energy efficient homes had to be to qualify.
But he added: “The fact remains that the Government intends to lower the tariffs as soon as it can and has said it wants to review the rate further every six months. Given this, our restructuring exercise remains ongoing.”
Labour’s Shadow Energy Secretary Caroline Flint said the change could amount to a 70% cut in the feed-in tariff (FIT) subsidy in just six months.
Ministers have warned the falling costs of solar technology made the subsidies too generous and FITs risked spiralling over budget.
The Department of Energy and Climate Change (DECC) said the popularity of solar panels meant the £1bn budget for the current spending period had been blown, and £1.7bn was already committed to payments.
DECC estimated the new system will deliver 620,000 new installations up until 2015 for £500m, far less than the £1.7bn cost of the 250,000 solar projects already installed.
Climate change minister Greg Barker, forced to respond to an urgent question from Ms Flint in the Commons, set out the Government’s new plans.
He said it would be “a more predictable and transparent scheme” as costs fell.
It marked a “turning point” that would see the number of renewable technologies installed by households rise, said the minister.
He added: “This will be a challenging package. The tariff degression method we are proposing will not allow for fat profits or for excessive rents.”
The rate of FIT per kilowatt hour exported from a small-scale solar installation to the National Grid will be halved to 21p, with a further cut from July.
Under plans contained in a Government consultation this could then be followed by further reductions as costs fall. Ms Flint, whose urgent question forced Mr Barker to the despatch box, asked him to confirm he was “proposing a further cut in the tariff level for solar power to 13.6p from July this year – that is a 70% cut in six months and out of all proportion to falling costs in the industry”.
Mr Barker said the 13.6p was the lowest of three options for July being considered.
Ms Flint claimed the cuts would mean “15 to 20,000 job losses” in the solar industry and that the plans would exclude people on social housing and community organisations.
Mr Barker said the Government would “discriminate in favour” of community groups by creating a special band within the scheme.