The government has lost its appeal against a High Court decision that it acted unlawfully in slashing solar subsidies in a move that could see thousands of homeowners receive a higher Feed-in Tariff rate.
The government has also been told to pay costs for the legal hearing which was taken by environmental charity Friends of the Earth and solar firms Solarcentury and HomeSun and supported by a wide number of environmental and solar companies.
However the government will now seek leave to appeal the decision to the Supreme Court, raising further questions over confidence in the industry.
Energy secretary Chris Huhne said: “We have already put before Parliament changes to the regulations that will bring a 21p rate into effect from April for solar pv installations from 3 March to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry.
“We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to half the number of installations. Solar PV can have strong and vibrant future in UK and we want a lasting FITs scheme to support that future and jobs in the industry.”
But Friends of the Earth called for ministers to examine using payments the industry generates to safeguard the long-term stability of the solar industry.
The environmental campaigning charity also called for crucial amendments to proposed government solar payment changes, including re-examining over-strict energy efficiency rules that will prevent 90 per cent of houses from claiming solar subsidies.
DECC is proposing that all new solar PV installations after 1 April 2012 will need to demonstrate that the building to which the installation is attached meets a certain level of energy efficiency and if it doesn’t the FIT rate will be reduced from 21p/kWh to 9p/kWh unless the owner takes one of two options that include bringing the property up to an EPC rating of level C or higher.
Friends of the Earth’s executive director Andy Atkins said: “This landmark judgement confirms that devastating government plans to rush through cuts to solar payments are illegal – and will prevent ministers from causing industry chaos with similar cuts in future. The government must now take steps to safeguard the UK’s solar industry and the 29,000 jobs still facing the chop.
“Ministers must abandon plans to tighten the screw on which homes qualify for solar payments – and use the massive tax revenues generated by solar to protect the industry. Helping more people to plug into clean British energy will help protect cash-strapped households from soaring fuel bills.”
The Government appealed a High Court ruling that a reduction in FiTs from 43p per Kilowatt hour to 21p for solar PV panels installed on or after 12 December 2011 was unlawful
Today’s ruling means that, subject to any further appeal to the Supreme Court, solar tariff payments will remain at 43.3p (p/kWh) until 3 March 2012 when – following Government moves last week – they will fall to 21 pence.
Energy secretary Chris Huhne last week tabled measures to ensure that FiTs payments are reduced from 3 March, with the outcome of the consultation on the government’s proposed changes to the scheme due to be published on 9 February.
Managing director of consulting engineering firm Encraft, who supported the appeal financially, Matthew Rhodes told CN that the main impact of today’s verdict is that it will provide greater confidence for investors in the field of renewable energy.
“The short term implications of this are quite limited because there is not a lot of time between now and 3 March anyway. I would rather focus on the big picture and that is that the judicial process has set out that when the government makes promises it cannot retrospectively change its mind and that is vital for investor confidence.
“This means that a large amount of construction and retrofit activity can now be done where investors are getting a guaranteed rate of return be that through FiTs, the Renewable Heat Incentive or the Green Deal.
“I have spent the past 8 years trying to engage with people on [renewable energy] and the last three months have been depressing because things were being signalled by government that destroyed the credibility we had within the market. But prices will continue to come down and you will still see some good deals out there at the 21p rate.”
Wates Living Space energy director Miles Hearn said: “For those in the social housing sector, the ambiguity lies not only in the amount of rate that will be applied but also in how multi-installation schemes may operate, as the government has yet to begin the essential Phase Two Consultation exercise on this aspect.
“It is likely that following the consultation, the efficiency standards required to qualify for grants will be set at a level that up to 75 per cent of social homes will fail to meet. For someone breaking ground on a social housing project today, it is therefore currently impossible for them to plan for the short or medium-term, let alone make a lasting commitment to solar PV; a situation which is extremely damaging to the sector.”
However the Electrical Contractors’ Association says the ruling could spell problems for an industry that is already reeling from government announcements in the last few months.
ECA head of environment Paul Reeve said: “Before anyone celebrates, we should remember that future funding for FITs is not unlimited. Some of the available cash could now be used up in a second ‘rush to install’ before 3 March, when FITs will be halved to 21p/kWh.
“The first ‘rush to install’ took place up to 12 December to beat the Government’s initial deadline for halving FITs. That resulted in far more PV installations than DECC planned, which are now claiming FITs for 25 years at the previous high tariff. A second rush now could put even more pressure on future FITs.”
Climate change minister Greg Barker said on Twitter after the ruling: “#solar, Win, lose or draw today, important we move forward together, drive down costs + step up deployment.”