Updated 11.45: UK Government loses feed-in tariff appeal
25 January 2012
The appeal court has refused the Secretary of State permission to challenge an earlier ruling that solar Feed-in Tariffs can not be changed retrospectively; Judge also denies request for DECC to go to the Supreme Court, though DECC now indicates it will seek permission to appeal directly from the Supreme Court regardless of today’s decision.
Commenting on the decision, HomeSun ceo, Daniel Green, said, “four Judges, including three in The Court of Appeal, have now called the Government’s actions illegal. That’s a [...] a decisive ruling that Government may not make retrospective changes to the FiT because [...] to do so would be to take away an existing entitlement without statutory authority”.
Further, Green said, “the Secretary of State has failed to have proper regard for the rights conferred by the FiT, which aims to encourage homeowners to generate their own energy. Like a Government bond, that rate is fixed depending on the date the installation becomes eligible and Government cannot change it as they choose”.
DECC has indicated it will now go directly to the Supreme Court to request permission to appeal.
According to HomeSun, today’s decision means that for all installations the FiT remains at 43.3p for 25 years until the Government lays a lawful draft modification to the present rates before Parliament for a minimum of 40 days. This means that the earliest any new rate can kick in is March 3, something the Department of Energy and Climate Change (DECC) had already appeared to accept.
For it’s part DECC had always stuck firm in defending the necessity of the 12 December deadline. Speaking to Renewable Energy Focus earlier, Minister Charles Hendry explained that the decision to lower tariff rates from 12 December, instead of April as originally expected, was to protect the feed-in tariff budget from a four-month ‘fire-sale’ to install solar panels before the rate was cut by over half: “If we had proposed that the tariff change would happen in the spring, then every salesman would have been going round the country, knocking on doors, saying, ‘come on, guys – sign up, we know this is going to halve in April. We can get all of that done and installed in that time’, and we would have seen a complete fire sale.”
And any resulting bubble – which may now happen – would “soon burst, with disastrous consequences for the tariff as a whole”, Hendry claimed.
But according to HomeSun, it is the Governments’ own action that created a bubble of its own: “The Government’s premature action before Christmas created a massive spike in solar installations between 31 October and 12 December, which has ended up costing the FiT budget £100 million. The current legacy for all installs up until 12 December (including other technologies) is £268m per annum. This means all of next year’s budget is already spent and substantially exceeded, and even 2013/14’s entire budget is already gone”
Despite today’s victory, some in the solar industry have been cautious on Feed-in tariffs. Many believe that the tariff was set too high in the first place, and even the solar industry’s main complaint was the speed with which the changes were to be brought in, not allowing them time to adjust their businesses accordingly.
And some industry insiders believe that the renewables sector, for its part, needs to make concessions to Government when it comes to financial support. “The industry’s got a bit of a reputation for always wanting more, in the expectation that it will be ratcheted down a bit,” one industry figure says. “Industry needs to stop doing that, and come back with something that more accurately reflects what the returns need to be in order to result in deployment.”
According to Gaynor Hartnell of the UK ‘s Renewable Energy Association, “The Government’s action and the subsequent court case had together thrown the solar industry into a state of extreme uncertainty, which was most regrettable. 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.”