Out-Law / Your Daily Need-To-Know

Out-Law News 3 min. read

FiTs uncertainty remains for solar industry as Government refused leave to appeal

The Government has been denied the opportunity to appeal to the Supreme Court in over its "legally flawed" decision to reduce subsidies to businesses and homes which use solar panels to generate renewable  energy.

The Supreme Court said that the Government's appeal "does not raise an arguable point of law of general public importance... bearing in mind that the case has already been the subject of judicial decision and reviewed on appeal".

This means that any solar photovoltaic (PV) up to and including a 4 KW installation in working order and licensed before the Government's contingency cut-off eligibility date of 3 March 2012 will qualify for the current feed-in tariff (FiT) of 39.6 p per KWh if new build and 45.4 p per KWh if retrofit for the period of support under the scheme, which is currently 25 years. Projects certified after this date will only be able to take advantage of the higher rate until it is cut to 21p/kWh for all small projects from 1 April 2012.

The Government had planned to appeal against the findings of the Court of Appeal and  judicial review proceedings that had been brought by two solar companies and campaigning organisation Friends of the Earth.

The parties had successfully argued that the Government's plan to halve the FiT available to all schemes completed after 12 December 2011, 11 days before its consultation on its proposed new rates ended, was illegal.

Environmental law expert Linda Fletcher of Pinsent Masons, the law firm behind Out-Law.com, warned that uncertainty remained for the solar industry with regards to the Government's treatment of the technology.

"The sector will be very pleased at the outcome which does bring certainty in that respect, but there are still two ongoing consultations on this subject which close in April," she said. "Until the results of those are in and further regulations produced the industry will still be watching to see what happens to the length of support for solar FiTs."

FiTs provide long-term financial incentives to businesses and individuals that generate electricity from renewable sources, and vary according to the technology used. Once accredited under the FiTs scheme, installers are eligible for payments for the life of the generation equipment subject to a maximum period of 25 years for solar photovoltaic (PV projects), however under the Government's latest proposals this could be cut to 20 years in line with other technologies that can receive support under the scheme.

Last month the Department for Energy and Climate Change (DECC) published a consultation on the second phase of its review of the FiTs scheme as well as further proposals on FiTs for technologies other than solar PV and scheme administration issues. The consultation closes at the end of next week.

Under the proposals, solar FiTs will come down with the costs of the technology, but Fletcher said it remained to be seen how frequently those reviews would take place and, more importantly, how much notice the industry would receive before any changes were implemented.

The cost of installing a small-scale solar PV project has come down by approximately 45% since 2009, according to Government estimates, with a resulting surge in installations putting a "huge strain" on its budget for the FiTs scheme as a whole.

In a statement, Energy Secretary Ed Davey said that he was "disappointed" the Government had not been allowed to plead its case to the Supreme Court but commented that the decision "draws a line" under the debate.

"We will now focus all our efforts on ensuring the future stability and cost effectiveness of solar and other microgeneration technologies for the many, not the few," he said.

Jeremy Leggett of Solarcentury, one of the companies that raised the original High Court challenge to the Government's policy, said that the Supreme Court's decision showed that the Government's handling of solar FiTs had been illegal from the start.

"Renewables can only play the pivotal role necessary to deliver a new green economy if we have a stable market and investor confidence backed by lawful, predictable and carefully considered policy," he said. "I hope the Government is now clear that it will be held to account if it tries to act illegally and push through unlawful policy changes."

The scheme allowed the UK's solar capacity to reach the first 1GW of the Government's goal of 20GW by 2020, according to Solarcentury's figures. Before the FiTs scheme was introduced there was just 26MW of installed solar generation capacity in the UK, the company said.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.