Isra-Mart srl:Huhne faces heat from solar review critics

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The battle between the government and the solar industry looks set to intensify after energy and climate change secretary Chris Huhne today offered a defence of his department's decision to launch a fast-track review of incentives offered to large solar installations.

Writing in the Western Morning News and Western Daily Press to accompany a visit to the south west, the region most likely to be affected by the government's plan to cut feed-in tariff support for solar farms, Huhne insisted the proposed cuts were necessary to protect incentives for smaller installations and limit upward pressure on energy bills.

"The money for FITs comes from you and [me]: it's a cost which is added to energy bills," he wrote. "When the previous government started FITs, it never predicted or allowed for large-scale solar installations so early on in the scheme. But such interest, especially in the south west, has the real risk of skewing the costs of the whole scheme, which in turn will push up the costs on energy bills and hog the money that was meant for householders."

He said eight solar farms had already been granted planning permission in the south west and an estimated 20 more were in the pipeline, adding that each 5MW solar farm could deny 1,500 homes from claiming feed-in tariffs for solar panels on their roofs.

"Even if only half of these [planned solar farms] go ahead and start claiming FITs, then nearly a fifth of the scheme's projected costs for the next financial year will have already been spent, leaving hundreds of homes, small businesses and communities without," he wrote. "If we let large solar installations continue unabated, then the money will run out and it will run out more quickly."

But solar industry insiders remain furious at the government's decision to review feed-in tariffs for all installations with more than 50kW capacity, including mid-sized rooftop installations that are a fraction of the size of the largest solar farms.

Some critics are now privately accusing the government of exaggerating the scale of the threat presented by solar farms and reneging on a promise to announce a "trigger for early review".

Recently released figures from Ofgem suggest that during the first nine months of the scheme, just £6.2m has been paid out to generators, against the government's projection that spend for the first year of the scheme would be £30m.

BusinessGreen has also obtained documents suggesting the government originally budgeted up to £51m for the first year of the scheme, while a DECC spokeswoman confirmed that even with cuts agreed as part of last year's spending review, the government has budgeted £900m of cumulative spend for the scheme between 2010 and 2014.

The disparity between the £6.2m paid to date under the feed-in tariff and the first-year budget of between £30m and £51m has prompted outrage from some within the industry, who are adamant that there is little evidence of the "solar gold rush" the government has claimed it is trying to counteract.

There is also anger at the decision to renege on commitments made by climate change minister Greg Barker in the House of Commons that the department would announce a "trigger" point at which an early review of the scheme would be enacted ahead of the first scheduled review in 2012.

A DECC spokeswoman said the government had decided to dispense with announcing a trigger point for an early review as it "just wanted to get on with it" and provide the industry with earlier certainty.

She also insisted that government projections suggested a "gold rush" was underway and as such solar farms presented a "threat" to the overall feed-in tariff budget.

"The evidence we have seen shows there are solar farms in the pipeline, and we are aware of more being planned," she said. "If we break the £900m budget, it goes on people's bills and we have a duty of care [to stop that happening]. We have just come out of the recession and we have to be fiscally responsible."