The UK government’s decision to slash solar subsidies will strangle growth in the industry, Labour says.
Ministers claimed cutting the level of feed-in tariffs (FITs), which pay people for the electricity they generate from small-scale renewable systems, was needed to avoid "boom and bust" in the system.
But shadow energy secretary Caroline Flint, speaking today as MPs debated the annual energy statement in the Commons, warned that “many of the firms currently providing solar are about to go to the wall”. “What sort of message does this whole debacle send out?” Flint said.
"How will the Government be able to encourage investors to support the renewable heat incentive, the Green Deal or other green policies in the future when a growing sector built on a flagship policy which had cross-party support has been cut off at its knees with just six weeks notice?
"How can anyone have the confidence to make the investment we need when this Government is so short-sighted, so short-term and chops and changes its policies at every turn?"
Flint’s attack came after energy secretary Chris Huhne updated MPs on the coalition's energy and climate change plans. He said while gas and electricity bills were likely to rise, the Government's measures would lessen their impact.
"By 2020, we expect household bills to be 7 per cent - or £94 - lower than they would otherwise be without our policies," Huhne claimed. "Britain's homes will be cheaper to heat and light than if we did nothing."
Huhne believed the Government's reforms, which include building nuclear power plants and aiming to provide 20 per cent of the UK's electricity from renewable sources by 2020, would "deliver secure, affordable electricity from a diverse mix of sources".
He said his department was driven by the need to minimise the effect of rising prices on consumers, adding: "We will secure our energy at the lowest cost: in the short term by promoting competition; in the medium term by insulating our homes and in the long term by steering us away from excessive reliance on fossil fuels and on to clean, green and secure energy."
But Flint claimed ministers were afraid of tackling the "big six" energy companies, advising consumers instead to seek the best deals to combat "soaring prices". She added: "Energy bills are up by 20 per cent this year.
"Standard tariffs have risen by £175 between June and November alone, driving up inflation and squeezing household budgets.
"But this Government is so out of touch its only answer is to tell people to shop around."
Tory backbencher Peter Lilley (Hitchin and Harpenden) said: "You said you want to keep energy prices as low as possible. How do you square that with the Stern Review on which your policies are based which makes it clear that policy can only work by raising energy prices to include the external costs of global heating and to raise the cost of hydrocarbon-based energy to make it more expensive than other forms of sustainable energy?
"In short, if your policy isn't hurting it isn't working."
Huhne said: "The key point here is that a very substantial part of what we need to do to tackle climate change are actually measures that we've legislated for in the Green Deal which pay for themselves. It's the energy saving element which means those bits which do have a cost, where we are raising process in order to move to the low carbon economy when it comes to electricity generation, are cut by the reduction in volumes of energy, precisely because of our energy saving measures.
Labour MP Frank Doran (Aberdeen North) said: "I heard your comments about the potential for Peterhead as a possible CCS project. I would welcome investment there but isn't it the case that organic projects are much more important to the country because it is coal-powered stations rather than the gas-powered station at Peterhead.
"Coal is where the export market in CCS is. Isn't it the case that Shell and Scottish Power have got their sums right and a much more realistic assessment of the investment needed for CCS power rather than the Government which has thrown away huge potential for an export market?"
Huhne replied: "I disagree about gas versus coal. I think gas is going to play a very important part in the world supply. I think there will be substantial markets for CCS in both. It's important we have the lead in that."
Labour's Angela Smith (Penistone and Stocksbridge) said: "My constituents have informed me that not only are they angry about the drop in tariffs, and these are people who have invested in the solar industry, but also about the arbitrary deadline of December 12 which means they have to rush to installation of solar energy in people's homes, which is producing a sharp increase in the prices of components and panels.
"Does this not mean that you thought very little about the impact of this policy?"
Huhne replied: "I disagree. When a policy is clearly happening in a way that is going off the rails it is important to grip that as quickly as possible. The problem with the industry was it was massively exceeding its budget, we would have been in a position where if we had not acted we would have been adding between £26 and £55 to the average household bill by the end of this Parliament and that was simply too much.
"We have to take account of the cost to the consumer and I very much regret the fact that the Opposition does not seem to remember that."