'Clumsy' handling of solar subsidy cuts may have fatally damaged industry

Plans to require homes to meet a C-rated energy efficiency standard before they can receive subsidies 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 between £5,600 and £14,000, even before the panels are purchased, they said.

Joan Walley, chair of the environmental audit committee said: "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 stop nine out of 10 installations from going ahead, which will have a devastating effect on hundreds of solar companies and small building firms installing these panels across the country."

Rising energy bills and the falling cost of solar panels made the original subsidy rates so attractive that tens of thousands of households, companies and community groups have rushed to install 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.

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