Solar company Ingenero Pty Ltd won the tender to build the Cloncurry Solar Farm last December.
The Bligh government had promised it $5.7 million in support for the project but Mr McArdle said the contract had always allowed the government to withdraw at any time.
He said the decision to pull funding was about getting the state's finances back on track.
"These are savings which will benefit all Queenslanders rather than localised climate initiatives," Mr McArdle said in a statement on Thursday.
It was up to the private sector to decide whether to invest in such projects, he added.
Last week the government offered payouts to 30 public servants in its Office of Climate Change amid plans to wind back the state's climate change initiatives.
Ingenero chief executive Steve McRae declined to comment, saying the company had only just learned of the state government's decision.
A statement on Ingenero's website estimates the Cloncurry Solar Farm would cost $6.76 million and would be able to power about 500 households per year.
Electricity generated would feed into the Mount Isa/Cloncurry electricity network and offset about 76,770 tonnes of greenhouse gas emissions in its lifetime.
heraldsun.com.au 24 May 2012