Social tenants to miss out on £120 solar savings

A pioneering project to provide 22,000 tenants of social housing schemes with solar panels generating free electricity is in jeopardy.

Fears that the government would cut back subsidies for solar installations have prompted backers to withdraw their support.

The project had been planned by Empower Community, a social enterprise, with support from eight local authorities and housing associations, along with charities and a major pension fund.

Empower says families would have saved an average of £120 a year off their bills, by using free solar power during daylight hours.

The project was to take advantage of a subsidy arrangement, called a feed-in tariff, designed to encourage renewable energy generation. Householders are paid a generous price for any renewable power they manage to produce.

It was well known that a reduction in the rates on offer for solar electricity was likely to be implemented in April next year.

But there has been mounting speculation that ministers will announce a cut of as much as 75% and bring it in from January, after receiving a stampede of applications for the help.

"I was gobsmacked when I heard," says Alex Grayson, managing partner of Empower Community, "The policy is being cut off at the knees."

We all pay for the subsidies, through our electricity bills. They have been criticised for costing electricity users too much and for benefiting mainly richer households and big investment funds.

But Empower argues that its project would have redressed the balance, saving money for low-income families, many of them using pre-payment meters and paying the highest prices for power.

Installations were planned for Wales, Yorkshire, East Anglia and Lincolnshire, with the work starting in January and finishing in March.

Tens of thousands of installations planned by other organisations could be affected as well.

Each home would have had between 8 and 12 solar panels fitted on a south-facing roof, providing the occupants free electricity for 25 years.

In practice, the panels were expected to save between £100 and £250 from a typical electricity bill, depending on how much electricity families could take advantage of while the sun was shining.

Any leftover power would be sold on the National Grid, with the profits and the subsidy shared between the social landlord and financial backers.

The Department of Energy and Climate Change told the BBC that all the subsidised tariffs were being considered in a Comprehensive Review.

"We've made clear that tariffs will remain unchanged until April 2012 unless the review indicates the need for greater urgency," added a DECC spokesperson.

However, once rumours started circulating that the Department was planning to pull forward a cut in rates, Empower's financial backers put £175m of support on hold.

If the right financing was in place, it is thought that a million housing association and council homes could be suitable for solar panels.