Government warned against cutting green energy subsidies

Reducing green subsidies for small-scale renewables such as solar panels as part of forthcoming spending cuts could cause investors to ‘flee’ the sector, the Government has been warned.

Businesses ranging from solar panel manufacturers to major energy companies warned prematurely adjusting tariffs paid for green electricity would have a ‘profoundly damaging’ effect on investment in low carbon industry.

There are fears the Treasury wants to see feed-in tariffs reduced ahead of a planned review of the levels of subsidy, which would take effect in 2013. The call to protect existing tariffs came as the first official figures from the Department of Energy and Climate Change (Decc) revealed 2,771 renewable energy schemes had been installed so far to benefit from the scheme which began in April.

Almost 98 per cent of the installations put in since July last year to benefit from the feed-in tariffs were photovoltaic solar panels which generate electricity, with the majority going up on homes.

The open letter to the Treasury and Decc from businesses, organised by the Micropower Council, warns: ‘Premature adjustments to the tariff would have a profoundly damaging effect on long-term investor confidence in the clean tech and renewable energy sectors, and may cause investors to flee altogether, thereby stifling any future investment and seriously jeopardising this country's ability to meet its climate change and renewable energy targets.’

The companies also warned their ability to attract future investment into renewables ‘would be put in mortal peril by such an unprecedented and confidence-shattering intervention’.

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