According to ‘Business Green’ the government has today confirmed it is planning to slash solar incentives by over 50 per cent, cutting the feed-in tariffs available to domestic and small scale business installations from 43p per kWh to just 21p per kWh.
The Department of Energy and Climate Change (DECC) today launched a consultation on the proposed changes, confirming it wants the reduced tariffs to come into force as early as December 12.
Under the proposals the new tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2011.
Such installations would then receive the current tariff before moving to the lower tariffs on 1 April 2012, assuming the government does not make further changes following the closure of the consultation on 23 December.
If brought into effect they would cut rates of return for solar installations from current levels that have in some cases topped 10 per cent to just 4.5 per cent to five per cent.
Significantly, the returns would be below the five to eight per cent originally envisaged by the feed-in tariff scheme.
The consultation also proposes cuts of between 14 per cent and 55.5 per cent for larger installations with between 4kW and 250kW of capacity.
The largest cuts of over 55 per cent are reserved for installations with 4-10kW of capacity, while larger installations with 150-250kW capacity that are typically favoured by businesses and community projects will see tariffs fall from 15p/kWh to 12.9p/kWh.
Industry experts have warned that the deep cuts would lead to a severe contraction in demand and an end to free solar financing schemes and social housing projects.
However, climate minister Greg Barker insisted the deep cuts were essential to ensure the feed-in tariff scheme remains within its spending cap and provides more "sustainable" foundations for the UK's solar industry.