Energy minister Claire Perry has been urged to maintain the mechanism that enables households to get paid for surplus electricity generated by their solar panels.

An open letter, which has been signed by more than 200 individuals ranging from environmentalists and politicians to the keyboard player of the Super Furry Animals, calls for the retention after next April of the export tariff.

This is the mechanism, which works alongside the feed-in tariff (FIT) to ensure that small solar generators are paid for the power they feed into the grid.

A government consultation paper on the future policy framework for small scale low carbon projects, published last month, said the FIT subsidies and export tariffs will both be axed next April when the existing scheme ends.

The letter, issued by the Solar Trade Association (STA), says that the development of the budding solar power market will be “stifled” if the export tariff is not continued.

It says: “If the export tariff is removed next April, householders, SMEs, and others investing in solar and smart technologies will encounter very nascent markets that currently lack regulatory foundations. They would therefore potentially have to spill their power onto the grid for free, effectively subsidising the commercial electricity sector. Domestic households, community groups, farmers and small businesses with solar would be the only generators not paid for their exported power.”

In this scenario, small scale generators would effectively subsidise big power companies, it says.

“We hope you agree that this wouldn’t be acceptable. Such negative treatment will stifle the market, put off early adopters and give the wrong signals about grid interaction to consumers, thus slowing down UK progress towards a smart and flexible energy system.

The signatories also urge Perry to remove a series of regulatory barriers which currently prevent a market for local flexibility services and exported power to flourish.

STA chief executive Chris Hewett said: “The latest government proposals for solar power are creating shock waves well beyond the solar industry. Nobody can fathom how government can contemplate leaving households and small organisations as the only generators left unpaid for the valuable power they put into the electricity network.

“We are asking the energy minister to act quickly and promise to maintain the export tariff and to uphold the basic rights of a market.

“It is vital for government to ensure households and small businesses are taken on a clear and secure journey in the emerging smart energy system. It is not too late for some really positive policies given the potential of smart homes and businesses to save the system and our economy billions of pounds compared to business as usual. Removing illogical barriers to the 830,000 solar homes in the UK to installing battery storage and smart meters is also an easy win.

“Let’s be clear; we are not asking for subsidy. We are asking for fair treatment for the everyday people and businesses who want to invest in clean power to do something really meaningful to help tackle climate change. Government must support their efforts.”

A spokesperson from the Department for Business, Energy and Industrial Strategy, added: “This scheme has been hugely successful, outstripping our predictions and generating enough electricity for two million homes. But it’s only right we protect consumers from costs and adjust incentives as costs fall.

“We are world leaders in renewable energy and since 1990 have cut emissions by more than 40 per cent and are committed to continuing to lead the world in renewables.

“The government is investing more than £2.5 billion on low carbon innovation by 2021 and is seeking views on the challenges and opportunities from small-scale low-carbon generation in contributing to government’s objectives for clean, secure, affordable and flexible power.”