Community groups and councils that use the feed-in tariff scheme to generate cheap energy could launch legal action against the government if the initiative is cut in today's Comprehensive Spending Review, Friends of the Earth (FoE) has warned.
Feed-in tariff levels have been set out by the government with the promise they would not be reduced until 2013, the lobby group reminded energy minister Greg Barker in a letter.
Small-scale energy suppliers have planned and invested accordingly, so changing tariff rates could undermine these plans.
"If ministers try to cut agreed payments for green electricity generation they may find themselves in court," commented FoE policy and campaigns director Craig Bennett.
Cutting rates "would risk destabilising the UK's small-scale renewable electricity market at the precise moment that it is finally starting to gain momentum", he pointed out, adding that it could also affect the prime minister's commitment to being "the greenest government ever".
Public austerity measures are to be set out by chancellor George Osborne this afternoon.