Government loses appeal over solar energy tariff cuts
By Richard Johnstone | 25 January 2012
The government
today lost its appeal against December’s High Court judgment that planned cuts
to solar energy subsidies were illegal.
It could now face
compensation claims from councils and households that abandoned solar
installations following the announcement of the cuts.
The Court of
Appeal upheld the original ruling that the Department for Energy and Climate Change could
not reduce the Feed-in Tariff subsidy paid to households and businesses for
solar power generated. The judges said that implementing cuts before the end of
a consultation on the change was unlawful.
Energy Secretary Chris Huhne said he plans to appeal to the Supreme Court.
Ministers wanted
to halve the tariff to 21p per kilowatt-hour for solar panels installed after
December 12 last year, although the consultation on the proposals did not end until
December 23. The government said this change was needed due to a
higher-than-expected take-up that could have used up the four-year £637m budget
by 2012/13.
Following the High Court ruling, the government allowed the 43p tariff to remain in place until March 3.
Huhne said: ‘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 halve the number of installations,’ he said.
‘Solar photovoltaic [generation] can have a strong and vibrant future in
UK and we want a lasting FiTs scheme to support that future and jobs in the
industry.’
The Local
Government Association, which had previously warned that the change could cost councils millions
of pounds, called for the government to resolve the uncertainty.
David Parsons, chair
of the LGA’s Environment Board, said that the announcement of the cut ‘caused
the cancellation of thousands of solar panel installations’.
He said: ‘Some
councils were left with little choice but to let down thousands of tenants,
while writing off millions of pounds which had been spent preparing and
tendering for solar panel installations which would never see the light of day.’
He urged the government ‘to go back to the drawing board’ and re-examine the planned change.
The CBI called on
the government to ‘draw a line under this saga’, which had undermined confidence
in the renewables sector.
Director general John Cridland said: ‘We must bring
certainty back to this high growth sector. Looking to the future, the government
should guarantee the rate applicants will receive earlier in the process, for
all the technologies covered by the feed-in-tariff, to give buyers the
confidence to proceed.’
Libbie Henderson, a partner in the energy practice at law firm Dickinson Dees, warned that the decision could mean
even greater cuts to rates for new systems in subsequent years. These could be
needed to balance the impact of the higher rates continuing to be paid for systems
installed since December 12, she said.
She added that the government could
face claims for compensation after the Court of Appeal’s decision.
‘The detail of the High Court and
Court of Appeal’s judgments will be of great interest to those who had made plans
in reliance of the current FiT rates continuing until April 2012 and who have
subsequently incurred costs. It is possible that the fallout from the government’s
actions will continue for months to come.’
