Solar power subsidies to be slashed

The Government is set to announce plans to reduce subsidies for household solar electricity this week, with fears the payments could be slashed by half.

Ministers have warned that feed-in tariffs (FITs), which pay people for the electricity they generate from small-scale renewables, must be cut for solar to reflect cost reductions in the technology and the current economic situation.

Installations of solar photovoltaic panels have outstripped expectations and the Government claims reductions in the subsidies, which are funded from consumer bills, are needed to ensure that the scheme is sustainable. However the industry is warning large-scale cuts could seriously damage the sector and the thousands of jobs it now provides.

A leaked document has suggested the subsidy could be reduced by more than 50 per cent on current levels, for all installations registered after early December, which would bring down average domestic payments from almost £1,200 to under £650. The Department of Energy and Climate Change says the document from the Energy Saving Trust was "neither final nor accurate".