The Government’s “botched” announcement of cuts to the solar subsidy scheme caused a scramble in which more than 100,000 people rushed to join at the old higher rate.
The frenzy late last year saw almost as many solar panels installed during a six week window as in the preceding 19 months as homowners fought to set up their equipment before cuts were imposed.
It came after ministers announced on October 31 that any panels installed after December 12 would attract a lower feed-in tariff subsidy, paid to homes that generate green electricity.
Figures announced by the Department of Energy and Climate Change (DECC) show that between April 2010 and the announcement late last autumn there were 127,474 installations – a rate of 220 per day.
But the government’s decision prompted a spate of panic-buying with a further 102,183 panels installed during the six-week window between the announcement and the cut-off point for the higher subsidy, equal to 2,376 a day or an increase in rate of 1,100 per cent.
DECC estimates an average household will earn about £1000 a year tax free by installing solar panels, meaning the cost to the government of the six-week ‘gold rush’ could reach above £100 million.
The Feed-in tariff scheme rewards households for every unit of surplus energy they produce and contribute to the national grid, but in October the government announced the payback rate would drop from 43.3p per kilowatt hour to 21p on any panels not installed before December 12.
The new figures on installations were released in answer to a parliamentary question by Caroline Flint, the shadow energy and climate change secretary, on Wednesday.
She told the Daily Telegraph: “Everybody agreed that the feed-in tariff would need to come down as the industry grew but you need to manage that in a way that is fair to the bill-payer and recognises that we want to be a country that uses this type of energy.
“It has been a badly managed process from the start and the industry has gone from a stampede to a limbo. Solar panel installers aren’t even sure how to market themselves to people because they are not sure what is going to happen next.”
Last week DECC raised the spending cap for the feed-in tariff by £197 million after reallocating the funding from its Renewables Obligation incentive programme.
On Friday Chris Huhne, the Energy Secretary, announced an urgent appeal against a High Court ruling that its plans to reduce the subsidies on installations completed after December 12 was illegal because the deadline fell in the middle of a consultation period.
A DECC spokesperson said the department would clarify the situation for the industry and consumers once a court decision on whether to permit the appeal has been made.
On the subject of the installation figures, the spokesman said the department had “recognised the likely increase in installation numbers following the launch of the consultation, as set out in our Impact Assessment”.
A Friends of the Earth spokesperson said: “The trouble is that the government has botched the process and that has led to an over-inflated number of panels being installed in a short period of time, completely undermining the long-term future of the industry due to the uncertainty they have created.
“This whole debacle is a story of government incompetence.”
Gaynor Hartnell, head of the Renewable Energy Association, added: “Given the uncertainty created by the Judicial Review decision and Government’s subsequent appeal, it may be that the higher rates persist for some time.
“DECC’s statement of Friday afternoon suggested there would be a decision “in the next few weeks”. This means the uncertainty will persist, with the result that potential customers will not know what their tariff will be.”