Business group labels solar tariff cut 'an own goal'

11 Nov 2011

The Confederation of British Industry (CBI) has criticised the Government's unexpected decision to cut in half the subsidies for household generated solar electricity, by the middle of next month.

The solar 'feed-in tariffs' are paid to householders for the electricity they generate via solar panels. The current rate for exporting unused surplus electricity to the national grid is 43p per kilowatt-hour. However, in December this rate will fall to just 21p.

John Cridland, CBI director-general, has warned that the cuts will devastate businesses in the low-carbon sector, which has continued to grow throughout the recession, as well as undermining investors' confidence.

'Moving the goal posts doesn't just destroy projects and jobs, it creates a mood of uncertainty that puts off investors and they wonder what's coming next', he said.

'Some companies have invested heavily in solar photovoltaic systems, and in the supply chains needed to install them. That commitment has been undermined by the feed-in tariff decision – and so industry trust and confidence in the Government has evaporated. This bodes poorly for investment in future initiatives'.

The Government is facing legal challenges from Friends of the Earth and installers of the technology, over its decision. A Government spokesperson commented, 'We believe solar photovoltaic can have a strong and vibrant future in the UK and we are proposing changes to ensure a lasting feed-in tariffs scheme to support that future'.