Solar Panels: The Fight Goes On
On 25 January 2012, the Court of Appeal issued a decision which has at least temporarily halted the Government’s attempt to halve the main element of Feed In Tariffs paid to householders with new Solar PV panels.
The Government has indicated that it will now seek leave to take the case to the Supreme Court.
The case concerned the so called “generation element” of the Feed In Tariff for smaller (mainly domestic) Solar PV installations. The previous tariff was just over 43p per kWh generated. A greatly reduced tariff of 21p per kWh had been expected to come into effect on 1 April 2012. However, in October 2011, after citing fears over the rapidly depleting budget for the scheme and falls in the cost of new solar panels, the Government announced that the cut would take place ahead of schedule - with the reduced rate paid to anyone who installed solar panels after 12 December 2011.
There was a period of only 6 weeks between the announcement of the cut (in late October) and its implementation on 12th December 2011. This caused particular concern as it affected projects which had already been commissioned but not installed. The shock was felt acutely by the Solar Industry, with many staff laid off in the run up to Christmas.
In announcing the cut, the Government commenced a consultation process which closed on 23 December 2011, several days after the cut was due to be implemented. Both the High Court and now the Court of Appeal have held that the decision to implement the cut prior to the completion of the consultation was “legally flawed”.
Domestic installers and consumers are now in a state of limbo since they do not know what subsidy they will receive for PV panels installed since 12 December 2011. To end the uncertainty and any further damage to the sector, the CBI have urged the Government to abandon its attempt to appeal the case to the Supreme Court.
In the meantime, a contingency plan has been put in place which would maintain the generation tariff for post 12 December 2011 installations at the old rate until 3 March 2012 when the new lower rate will come into force.
The dispute does not affect households that have had PV panels installed before 12 December 2011. In addition, the other element of the Feed In Tariff, namely the so called “export tariff” (i.e. for surplus electricity exported to the National Grid) remains at 3.1p per kilowatt hour and this will be unaffected by the changes.
The Government is clearly concerned about the cost of the scheme to the taxpayer, and has expressed fears that the scheme may have to be cut short even at the reduced rate if there is a further rush of installations which uses up the scheme’s remaining budget. Indeed, the Government claims that even paying the higher rate for the temporary period between December and March will cost £1.5 billion over 25 years. With this in mind, further cuts, even to below the new proposed rate of 21p per kWh, cannot be ruled out.
Meanwhile, the fight goes on for the renewable energy industry and its supporters. Even if the legal fight is abandoned, it is most unlikely that the current rate of 43p per kWh will be maintained beyond March or April 2012.
In the medium to longer term, the dispute is most likely to dent industry confidence in government backed renewable energy schemes and questions have to be raised over the ability of the government to reach its carbon emissions targets.
If you would like further information or advice regarding the matters raised within this article please contact James Menzies at jamesmenzies@stones-solicitors.co.uk or telephone 01392 666889
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