The Department of Energy and Climate Change (DECC) is consulting on plans that would see subsidies for some new solar farms close by 2016.
As reported by The BBC, the government says that the move is necessary in order to protect consumers.
The solar industry said subsidies were one of the cheapest ways that the government could meet its climate change targets.
Under the government’s plans, so called “small scale” solar farms will no longer qualify for support under a key subsidy mechanism – the renewables obligation – from April next year.
New projects that receive the subsidy may also see the level cut.
Energy Secretary Amber Rudd said: “Our support has driven down the cost of renewable energy significantly.
“As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies.”
Small scale farms, which are regarded as the cornerstone of the industry, can be up to 25 acres in size and typically power around 1,500 homes.
Supporters argue that the growth of these projects has helped to drive down the cost of solar in recent years.
But the government says the amount of support for renewable energy – which is paid by households through their energy bills – is set to rise in the coming years above agreed levels.
The Solar Trade Association (STA) says the industry accounts for just 6 per cent of funds paid out under the renewables obligation.
It insists that support for solar is one of the cheapest ways that the government can meet its climate change targets.
Jonathan Selwyn, a board member of the STA, told the BBC’s Today programme that the subsidy cut would “have a very large impact” on the industry.
“Let’s get this straight, in the RO [renewables obligation], which is the solar farm’s main support subsidy, it’s costing about three pounds per annum on people’s energy bills – it’s a tiny amount when you compare it with other types of energy, like nuclear for example.”
He said government support had been “absolutely instrumental in the industry’s success” over the past five years, and that the industry was “tantalisingly close” to being able to operate without any subsidy.
However, he said that investor confidence would inevitably suffer by the consultation.
Mr Selwyn called for “a level playing field” for solar in relation to nuclear energy and fracking, in terms of subsidies and planning regulations.
