JOBS in the North-East's burgeoning solar panel industry are at risk from a cut in the subsidy given to householders for their installation, it was warned last night.

Climate Change Minister Greg Barker yesterday warned the renewable industry's annual conference that a cut in the so called Feed-in Tariffs (FITs) was looming.

It is understood that the Government will announce in the next few days that the subsidy is to be slashed from 43p per kWh to around 20p per kWh.

Some of the 100 solar industry firms already established in the North-East had feared it could be slashed to as low as 9p per kWh or even suspended altogether.

While FITs exists to encourage all forms of renewables around 97 per cent has so far gone into the photovoltaic (PV) panels used in the solar industry.

Although there was some relief that worst case scenario was unlikely, Malcolm Potter of the North-East Renewables Alliance (NERA) said it was still not good news.

NERA is a consortium made up of small firms which install renewable energy devices and Mr Potter said: "I think you will see some job losses and see some businesses struggling."

He said that while the sector has been expecting a cut in FITs, following the Government's announcement in February that it was reviewing the rates, it was the extent of the cut that has been of concern.

Mr Potter said: "If those figures are correct it is obviously in access of 50 per cent and that represents a huge drop in the return on investment for householders or for investors who may look to provide finance for bigger projects.

"It is certainly going to have a decelerating effect on the sector in terms of the number of companies that will come into it, because there has been a rapid acceleration so far.

"In terms of the companies that have just come into the sector, got themselves accredited, but are not yet bedded in, I would worry about the ongoing viability of that business because of the fact that the growth will be reduced considerably."

Phil Murray, managing director of Romag in Consett, one of only two firms in the UK to assemble photovoltaic panels, cautiously welcomed the fact the cuts would not be as deep as expected.

He said: "Our fear was that the level of FIT would be cut to as low as 9p/kwh which simply doesn't work for those looking to invest in PV.

"If the rumours are true and FITs are cut by 50%, then investment in PV can and will be sustained albeit at a reduced level."

Speaking at the Birmingham conference Mr Barker, an advocate of solar power, said he "believed passionately" that FITs were essential, but added that the green economy "does not exist in a bubble"

He said: "Let's not kid ourselves. Much of the growth in PV has been as much about consumers accessing the Government backed tariff as accessing the technology.

"High net worth individuals chasing returns which are now easily reaching double figures at a time when interest rates for savers have collapsed to an historic low. That can't be right."

Mr Barker said that PV costs had dropped as much as 70 per cent in two years and the tariff levels needed to reflect the new prices