The move is a blow the many contractors that have set up specialist installation businesses to take advantage of surging demand from local authorities and housing associations.
UK Climate Change and Energy Minister Greg Barker today confirmed feed-in tariffs (FITs) for solar power would be cut from 43.3p/kWh to 21p/kWh.
He explained the Government had to take action because of skyrocketing demand.
There will also be reduced tariffs for schemes of between 4 kWh and 250 kWh, while from April next year any property applying for a FIT will have to meet a minimum energy efficiency requirement.
“The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FITs scheme,” Barker said.
“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise.”
The cost of a typical photovoltaic installation has fallen from around £13,000 last April to £9,000 now.