Solar panel installations have slumped as suppliers struggle to cope with the end of subsidies and a damaging mis-selling scandal.
European Union rules forcing the government to quadruple VAT on certain installations from next month is expected to further damage the industry considered crucial to the UK meeting its ambitious carbon reduction targets.
Installations last year were down more than 75 per cent than those of 2015 as generous subsidies guaranteeing homeowners an income from selling power back to the grid have been eroded. From March this year, those subsidies, paid through a levy on everyone’s energy bills, were removed.
One million British homes — about one in 25 — have solar panels and they collectively generate the same amount of energy as Britain’s biggest power station. However, that number is now expected to stagnate despite growing awareness of the threat of climate change. Confidence in the industry has also been hit by a mis-selling scandal that has seen thousands of homeowners given false promises about the income their panels would generate to encourage them to take out high-cost loans to pay for them.
The Financial Ombudsman Service is dealing with more than 2,000 complaints from disgruntled consumers who feel they have been lied to by salesmen. Barclays Bank, which supplied many of the loans, has already put aside £38 million to pay compensation. Most of the companies accused of the mis-selling have now gone into liquidation.
Environmentalists and green energy providers are also concerned about the impact of government policy on the growth of solar power in the UK.