Households face solar panel subsidy cuts after tariff review

HOUSEHOLDS planning to install solar panels on their roofs are likely to see subsidy payments on offer cut significantly, as ministers attempt to prevent a forecast £1.5 billion overspend on renewable energy.

A government review is to be launched later this summer into the lucrative “feed-in-tariff ” subsidies – which have so far seen almost 700,000 homes get panels installed – with the intention of making “significant” savings, ministers said.

The move came after Amber Rudd, the Energy Secretary, announced plans to cut off subsidies for solar farms of up to 25 acres in size, vowing to end the “blank cheque” for green energy funded by families on their electricity bills.

The change could see hundreds of proposed projects scrapped – preventing an area 100 times the size of St James’s Park being covered with panels – but will only save a typical household up to £1.20 a year, said DECC officials.

Under a 2011 agreement between the Department of Energy and Climate Change and the Treasury, subsidies for green energy, which already stand at £4.3 billion a year, were supposed to be capped at £7.6 billion in 2020-21 – costing a typical household £92 on their annual energy bill.

But the subsidies are now forecast to rise to £9.1 billion in 2020-21 – costing households £18 more than expected, or a total of £110, according to DECC.

Officials said the ending of subsidies for “small” solar farms could avert between £40 million and £100 million of the forecast overspend – preventing consumers having to pay between 50p and £1.20 a year.

Subsidies for rooftop solar panels and other small-scale renewable electricity projects could present a bigger opportunity to make savings.

They are so far estimated to cost more than £700 million a year, or about £8 per household, and are currently forecast to rise to £1.6 billion a year, or about £19 per household, in 2020.