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The Great British Solar Power rush may soon come to a dramatic halt: the amount knocked off 'leccy bills for solar-powered homes will be slashed. Energy minister Greg Barker confirmed today that if cuts to the feed-in tariff (FiT) aren't made, his budget will simply run out.

But by how much will it be reduced? Details leaked by the Energy Savings Trust suggest that domestic tariffs will fall from 43.3p/kWh to 21p/kWh, effectively doubling the length of time required to pay back an investment in solar generating equipment. The quango believes the tariff change will be made in five weeks; meanwhile a consultation started today and ends on 23 December.

The FiT isn't a subsidy, strictly speaking, but it is a market-rigging mechanism that ensures electricity is more expensive to consumers than it should be. The government compels energy companies to pay owners of home solar installations a hefty sum - at the moment, several times the price of the electricity - whenever they generate any power, even if they use that power themselves rather than supplying it to the Grid. (The panel owners are also paid a small extra sum if the power goes to the Grid rather than using it themselves.) Some of this money comes from the government, and some comes from higher prices charged to ordinary businesses and consumers who don't have solar panels.

As they are in large part a flat tax on electricity which hits the poor much harder than the rich, climate activist George Monbiot has described FiTs as "extortionate, useless [and] deeply regressive".

Even after the proposed FiT reductions, the scheme will still push up electricity prices - an awkward fact given that the number of households living in fuel poverty, according to the Energy Dept, has doubled since 2004.

The idea of micro-power generation has the imprimatur of the Prime Minister. While he was still leader of the opposition, David Cameron was filmed on the roof of the offices of Greenpeace in London extolling the virtues of micro-generation:

Posted by 'webcameronuk' on December 17, 2007

Barker says the installed capacity is higher than expected and that "the generous pot of £867m secured for the feed-in tariff scheme by the Coalition last year will be completely devoured if we don't act now".

Increasingly governments have realised that market intervention to increase solar and wind renewable energy isn't sustainable. In Spain, where the solar rush was halted last year, a study found that one 'green' job cost 2.2 real jobs.

And in Spain, unlike the UK, the sun does occasionally appear. ®

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