'Only wealthiest will be able to afford solar panels'

Solar and wind power will be unaffordable to all but the "wealthiest homes" it was claimed yesterday after the Government cut the maximum grant for their installation by 83 per cent.

In a move that prompted warnings of job losses in the renewable power industry, the Trade and Industry Secretary Alistair Darling disclosed yesterday that householders installing green energy would be able to make a total claim of £2,500. Previously, they had been able to apply for a grant of £15,000; comprised of £10,000 for a PV solar panel system and £5,000 for a wind turbine.

The sharp cut was criticised for conflicting with Labour's commitment to a low-carbon economy. Demand had been so high for the Low Carbon Buildings Programme that its monthly allocation of money was taken up within minutes, prompting the suspension of the scheme in March.

In the latest controversy to hit the scheme, Mr Darling announced it would be restarted at the end of this month without the monthly cap on applications. But it emerged the maximum household grant would be capped at £2,500. The cuts come despite Gordon Brown raising funding for the scheme by 50 per cent to £18m at the last Budget.

Mr Darling said the renewable power industry had "tremendous potential" in the low-carbon economy. He added: "This grant scheme is designed to maximise carbon savings, demonstrate potential and help the sector become more commercially competitive in the long term."

But environmentalists and the microgeneration industry were furious. Both warn that Britain lags far behind other European countries on renewable power. Dave Timms, the economics campaigner for Friends of the Earth, described the modified grant scheme yesterday as, "woefully inadequate".

He said: "The public want to cut their emissions but the Government has failed to provide the funding to help them do this."

The Renewable Energy Association estimated that the cost to the customer of an average solar photovoltaic system would soar by more than 60 per cent.

Philip Wolfe, the chief executive, said: "While it is good news that the programme will be back up and running, this scale-back makes a nonsense of the extra funds from the Chancellor and of the Government's ambition to bring on-site power to the people."

He said from now on the cap meant renewable electricity would be unaffordable to, "all but the wealthiest households".