Wednesday, 25 January 2012

Government cut to solar tariffs blocked as appeal fails

The court case involved the government's move to halve the payments made to households with solar panels, which it says are unsustainable.

Solar businesses and campaigners had warned thousands of jobs could be lost as a result of the move.

Under the feed-in tariffs programme, people in Britain with solar panels are paid for the electricity they generate.
Confusion

The decision will lead to widespread confusion over what the tariff level is.

The previous tariff was just over 43p per Kilowatt-hour generated.

The new tariff of 21p per kilowatt-hour had been expected to come into effect from 1 April.

But in October, the government said the reduced rate would be paid to anyone who installed their solar panels after 12 December, sparking anger from environmental groups and installers.

The government announced a consultation on the proposals, which closed on 23 December - 11 days after the decision was to have been implemented.

The High Court ruled that changing the tariffs in this way was "legally flawed", a ruling the Court of Appeal has now upheld.

The change had particularly upset industry as it affected projects which may already have been commissioned but not installed.

"This decision has very important implications for the whole renewable energy sector in the UK," said Ben Warren a partner at Ernst and Young.

"It is a clear message that retrospective adjustment of support is not acceptable,"
Appeal

The government has put a contingency plan in place which would see the current tariff, of 43p, remain in place until the start of March.

However, they are also considering appealing in the Supreme Court against the latest ruling, potentially allowing them to return to the cut-off date of 12 December.

A DECC spokesperson said: "The Court of Appeal has upheld the High Court ruling on FITs. We are now considering our options."

They added that it meant there were "no guarantees" on any tariff consumers were offered after 12 December.

The tariff for surplus electricity exported to the national grid remains 3.1p per kilowatt-hour paid in addition to the tariff, and is unaffected by the changes.
Money shortage

There is also uncertainty about the sustainability of the reduced rate - as a rush of installations now may use up the scheme's remaining budget.

"The future of the feed in tariff beyond April 2012 is now hugely uncertain. Government and industry now need to work together to create a sustainable solar industry in the UK," added Mr Warren.

The Renewable Energy Association has called for the overall budget to be increased.

"The government's action and the subsequent court case had together thrown the solar industry into a state of extreme uncertainty," said chief executive Gaynor Hartnell.

"We now want to put this behind us as swiftly as possible, and work with government and supporters to secure a larger budget for small scale renewable energy generation," she added.

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