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This morning the Court of Appeal ruled against the Department of Energy and Climate Change (DECC), upholding the High Court judgement that Government’s December 12 feed-in tariff deadline was unlawful. Today’s ruling means that feed-in tariff rates will remain uncut until March 3, but how does this really affect the UK solar industry?
As it transpires, DECC was in fact granted the right to appeal against the High Court decision; however that victory was very short lived. Today, three judges agreed with Mr Justice Mitting’s pre-Christmas ruling that Government’s intention to implement a December 12 cut-off date weeks before the consultation period ended “was unlawful and that any new ‘reference date’ could only lawfully take effect from a date on or after the proposed modifications came into effect.”
The decision was reached on two linked bases:
Justice is served
Today’s news has been welcomed by the majority of those working in the UK solar industry, with various market players celebrating the fact that Government has finally been held accountable for its actions. In fact, 54 percent of Solar Power Portal poll participants this morning voted in favour of the decision, while just 8 percent said they were disappointed.
Speaking just after the announcement, Jeremy Leggett, Chairman, Solarcentury said: “A historic judgement has been made today, one that should be welcomed by the entire renewable energy industry. 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.
“Today we have reminded Government that it will be held to account when it acts illegally and tries to push through unlawful policy changes. We would much prefer not to have taken this path but Ministers gave us no choice. Our hope now is that we can work together again to restore the thriving jobs rich solar sector that has been so badly undermined by Government actions since October,” he continued.
Friends of the Earth’s Executive Director Andy Atkins commented: “This landmark judgement confirms that devastating Government plans to rush through cuts to solar payments are illegal – and will prevent Ministers from causing industry chaos with similar cuts in future.”
WhileHoward Johns, Chairman of the Solar Trade Association, said: “Hopefully today’s result will draw this episode to a close, and mean that one of the only growing sectors in the UK can get back to work. The Government’s appeal against the original ruling has created huge uncertainty for the thousands of small businesses in the sector, and we sincerely hope that the Government chooses not to take this further by appealing against this result.”
Gold rush
Today’s news, while a victory in the sense that Government has been pulled up on its illegal actions, has begun to prompt fears of yet another rush to install as much solar as possible in the lead up to the new cut-off point on March 3.
“The phones have already started ringing with homeowners keen to cash in on this mini gold rush. Given that the cost of solar PV installations has dropped dramatically since December 12, consumers can now achieve breathtaking returns on investment. In year one the return is 18 percent, while the average return over 25 years is a staggering 39 percent if you include inflationary increases in FiT payments and electricity price increases. Customers will also be able to enjoy a payback period of just three years,” explained David Hunt, one of the directors at Eco Environments.
Juliet Davenport, CEO of Good Energy said, “The credibility of the way the FiT budget is set has been seriously damaged, and the Government must reform the tariff to prevent this boom-and-bust situation from happening again. FiT is a great way to give people more control of their energy bills, so it’s no surprise that the scheme has been popular- it should not be a victim of its own success.”
Robert Goss, Managing Director of Conergy UK: "It looks likely there will be another boom even bigger than the one last quarter, as businesses and the public sector reinstate plans that were shelved after the cuts were announced, and others bring forward their projects. It will be solar on steroids for two months."
Meanwhile, Krannich Solar tweeted: “We expect huge increase in demand for PV materials until March 3.”
Another surge in solar installations could spell yet more potential problems for the UK solar industry, as Government is expected to keep an ever keener eye on deployment levels from now on and could impose even deeper cuts post April 1.
Libbie Henderson, Partner in the energy practice at Dickinson Dees said, “Whilst this is great news for the solar industry in the short term, it may mean that Phase 2 of the consultation will include further changes to the FiT scheme. These could include more significant reductions in the rates for new systems installed in subsequent years and/or shortening the period during which FiT will be paid.”
While DECC has confirmed the FiT rate will not drop below 21p before April 1, it is not currently clear what the rates will be after that point (something that has been made even more unclear by Government’s intention to launch yet another appeal – this time to the Supreme Court).
Uncertainty central
And, to complete the tale of woe, that grey cloud that has become so synonymous with the UK solar market loomed once more today when DECC revealed it may appeal to the Supreme Court – a process which could take up to a year.
A DECC spokesperson said: "The Court of Appeal has upheld the High Court ruling on FiTs. We are now considering our options."
This decision has been met with extreme contempt by industry, who argue that by appealing for the second time, Government negates its promise to provide some much-needed certainty.
David Hunt commented: “The Government had the chance today to restore consumer and industry confidence in the aftermath of the Court of Appeal ruling.
“However, by arrogantly pursuing an appeal, which could take many months to resolve, it is willing to jeopardise the future of hundreds of companies and tens of thousands of jobs.
“It is a callous and disgusting course of action which has the potential to wreck what should be one of the UK’s most dynamic and exciting industries.
“If the Government does not step back from the brink, it will have the destruction of the renewable energy industry on its hands and will ultimately pay a heavy price at the ballot box.”
Ash Sharma, Senior Research Director for Photovoltaics at IMS Research explained, “Whilst some in the industry may see today’s news positively, it will most likely spell more bad news and uncertainty for the industry. 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.”
By the beginning of next month we should have more of an idea of what the future holds as Government prepares to publish the results of Phase 1 of the FiT consultation, the launch of Phase 2, and its plans for appealing to the Supreme Court.
Confused?You can hear directly from DECC, Ray Noble, Cathy Debenham and other industry figures at the Solar Power UK Roadshow: “Coping with the Cuts” coming to a city near you in February and March this year.
