Cuts in green subsidies could have 'fatal impact' on solar industry Tim Yeo, Chairman of the Committee, accepted that the tariff had to be reduced because solar panels are becoming much cheaper due to demand in China and the cost was too much for taxpayers. However he said the Government should have realised much earlier on that the tariff would have to be reduced and given the solar industry plenty of warning and time to adjust their financial models. Instead the changes were made suddenly late in the summer. There now just a few months left before the new tariff comes in, meaning many investors will lose out as they do not have time to install panels before the reduced subsidy comes in. Mr Yeo said the "incompetent" way the cuts have been handled will damage the burgeoning solar industry in Britain, that promises to provide jobs for installers and manufacturers. it will also reduce the number of households willing to install solar panels and therefore reduce energy bills and cut carbon. Ultimately it could push up energy bills as investors no longer trust the Government so are charging more for the risk involved in building new energy infrastructure. "There is no question that solar subsidies need to be urgently reduced, but the Government has handled this clumsily," said Mr Yeo. Ministers should have spotted the solar gold rush much earlier. That way subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry," he said. The consequence of the rushed, eleventh-hour consultation will be uncertainty among investors in all kinds of renewable energy, which will inevitably push up the cost of capital. This is an extremely unfortunate outcome, because right now we need unprecedented levels of investment to replace ageing power stations and reduce emissions. Mr Yeo also criticised plans to only give the subsidy to more energy efficient homes. He pointed out that this will exclude poorer households, who cannot afford to install installation and owners of historic homes, who struggle to achieve high levels of energy efficiency because of the structure of the building. A DECC spokesperson insised the industry will be proteced. "We appreciate the uncertainty faced because of the changes we have proposed to the feed in tariff scheme but we believe solar projects will still be an attractive investment," a spokesman said. We stand by the need for the proposed changed in order to protect the budget which is funded by consumers through their energy bills. We will consider all responses to the consultation on FITs for solar PV carefully and will announce the outcome early in the new year.