A CUT in subsidies and a VAT increase have been blamed for putting "an unbearable strain" on renewable energy companies.

The insolvency body R3 says its members are reporting an increase in distress amongst SMEs in the areas of solar, wind and tidal power.

The recent 65 per cent cut in subsidies to solar feed-in tariffs coincided with increases in VAT on the installation of solar systems.

Already Sundog Energy, which supplied solar energy systems from its base in Penrith, for 20 years, has gone into liquidation.

The business' assets were acquired by Proton Energy, which moved the operation to Lancaster. Sundog employed 20 staff.

Richard Wolff, north west chairman of R3, warned that the UK’s emerging renewables sector could be in danger of stalling.

He said: “It was clear when the Government made its latest round of subsidy cuts that there would be casualties. The scale of the problem isn’t yet clear but we are starting to see the effects,”

Twenty-five per cent of the UK’s electricity came from renewables last year. However, the take-up of solar power domestically has declined significantly since the subsidy cuts.

New solar power capacity installed during February and March was 74 per cent lower than the same period of 2015.