Solar panel returns could be cut by 80pc

The Government is proposing to make full payments from "feed-in tariffs" conditional on homes meeting energy efficiency standards. The change would come into effect on April 1.

Currently, householders receive 43.3p per kWh of electricity generated. The Government will cut this rate for new installations to 21p in April, after an attempt to impose the cut sooner was thrown out by the courts. Unless that ruling is overturned on appeal, anyone who completes their installation before 3 March will still receive the higher rate.

But the proposal to link the payments to the overall energy efficiency of the property could see some solar panel owners receive just 9p – which is 79pc less than 43.3p – if their homes fail to meet the standard. The Government is still consulting about the plans, which would not affect installations completed before April.

The Energy Saving Trust said: "Where a domestic property does not meet these energy efficiency requirements, the solar PV [photovoltaic] installation may receive the lower tariff of 9p/kWh."

It added: "The Government is consulting on two alternative proposals: that the owner or occupier should bring the property up to an Energy Performance Certificate (EPC) rating of level C or above; or that the owner or occupier of a building should undertake all the measures that are identified on an EPC as potentially eligible for Green Deal finance, with no additional finance required.

"The Government wants to ensure that PV is considered as part of a whole house approach which prioritises energy efficiency."

A spokesperson for the Department of Energy and Climate Change (DECC) said: “It makes sense that, if someone is putting solar panels on their building, the property is energy efficient too. We consulted on the best ways of doing this by linking tariffs to specified minimum energy efficiency requirements and proposed introducing such a requirement from April 1. We’ll publish our final proposals by Feb 9.”

Despite losing its legal case in the Court of Appeal last week, the generation tariff rate for units installed after December remains at 21p per kWh as DECC is now escalating its appeal to the Supreme Court. If this case is unsuccessful home owners who installed units between December and March this year will revert to the higher tariff  and will receive backdated payments so they are not out of pocket.

But those installing units now should not assume they will automatically get this higher rate.