Solar energy

The Government is reviewing the Feed in Tariff (FIT) for solar installations. The FIT is the money that the micro-generator/householder receives per unit of electricity generated/fed into the grid.

The Government's proposal is that the FIT should be reduced by half from April 2012 for schemes that are not in place by December 12. The reason behind this is that there has been a huge uptake in the scheme that if left unaddressed would result in the entire FIT budget (£867 -million) being blown within months.

This rush towards solar is partly due to the plummeting price of solar panels. This has increased the financial returns available from solar generation (into the double digits compared with the 4% to 5% return envisaged when the scheme was set up).

Some will argue that we should increase the money going into this area but that would place additional demands on hard-pressed families already struggling to pay their bills (FITs are funded through extra charges on our electricity bills). Also, given finite funding, the lower tariff will result in the subsidy lasting longer (good for sustainable employment) and will mean that more solar installations are rolled out — as a lower FIT will allow the subsidy to be spread over more installations.

There is one area where I feel the Government needs to tread cautiously — the cut-off date of December 12. Some currently progressing schemes might not be able to make the deadline. This may mean the cancelling of some projects that, where large sunk costs have already been incurred, might result in significant financial losses.

I have made several representations to ministers, suggesting flexibility on the cut-off date and will take up cases with ministers when contacted by constituents — please do get in touch if you are concerned about this issue.