UK government loses solar subsidy court battle

The government has lost its battle to abruptly cut solar panel subsidies, adding to public confusion and solar industry upheaval.

The decision by the Court of Appeal means that the government’s premature cuts to Feed in Tariffs – which give owners of solar photovoltaic (PV) panels a fee for the amount of energy they produce – has now been overturned.

It is an embarrassing decision for the government and energy secretary Chris Huhne over a situation which has drawn widespread criticism.

The debacle began with a consultation to look at the costly FiT scheme, with the unexpected  popularity of PV panels meaning that subsidies were becoming unaffordable. However, while such cuts may have been necessary, the premature nature of them was considered kneejerk at best, and was largely considered to be disruptive to a growing UK solar industry.

This led to objections from environmental groups and businesses, leading to legal action to delay the cuts until later this year.  

Under the recent decision by the Department for Energy and Climate Change (DECC), subsidies would have been halved by December. Legal action from Friends of The Earth and others saw this moved back in line with the original timescale.

Finally, the Court denied the government’s appeal to reverse the decision, meaning a victory for those angered by the premature cuts – even though the cuts will still come into place at a later date.

Chris Huhne indicated that the DECC still “disagrees” with the decision and will be “seeking permission to appeal to the Supreme Court over the matter” – further adding to the chaos of the situation.

Solar expert at IMS Research, Ash Sharma, condemned the government’s actions, which he believes is fostering a situation of uncertainty amongst the public and solar industry as the fiasco trundles on.

“This latest development is likely to cause further confusion amongst the industry and prevent homeowners and businesses from fully understanding the potential risks and rewards of installing their own solar PV systems,” Sharma said.

“DECC has already indicated that it would seek to appeal to the Supreme Court which could then rule in its favour.

“This means that installers of PV systems currently cannot offer any guarantees to homeowners looking to install solar PV systems on how much money the systems will actually generate, and if it will actually provide a decent return on investment.”

The decision means that the future of the solar industry is in doubt. FiT cuts are a part of any solar economy and necessary as the global market evolves. Sharma says: “Whilst some in the industry may see today’s news positively, it will most likely spell more bad news and uncertainty for the industry.

“With further price declines expected in early 2012, it seems obvious that FiTs in the UK needed to be reduced, but today’s latest twist will likely cause on-going confusion, uncertainty and could spell the end of the UK solar PV industry.”