UK solar to challenge government use of LCF in Appeal Court

  • Royal Courts of Justice.

    The court will assess whether the government's use of the LCF in policy decision making is valid. Image: John Allan.

Two UK solar developers will tomorrow challenge the government’s use of the Levy Control Framework (LCF) to justify policy decisions in the Appeal Court.

Solarcentury and Lark Energy argue on Tuesday that the government’s decision in May 2014 to close support for large-scale solar farms under the Renewables Obligation was unlawful, and that the government should not have used spending constraints under the LCF to supersede other policy decisions.

An original attempt to prove the unlawfulness of the action was unsuccessful after the High Court ruled that ministers were justified in their decisions due to an LCF overspend. However the two developers have since suggested that the government has failed to provide any evidence that the scheme’s early closure was necessary to rein in expenditure.

The court will also rule over the lawfulness of announcing policy changes backdated to the day a consultation period is announced, as has become the go-to tactic for Department of Energy and Climate Change (DECC) policy consultations.

Both Solarcentury and Lark complained that this tactic was designed to have a “very immediate and damaging impact” on the solar market, and introduced a “level of political risk for which no investor or company can adequately prepare”.

The validity of DECC’s use of a purported LCF overspend to fuel policy decisions – and whether or not the framework is overspent at all – has been repeatedly questioned since the claims first surfaced in the middle of last year.

While numerous studies have sought to poke holes in the government’s calculations, former energy secretary Ed Davey has accused the government of “Alice in Wonderland economics” and questioned whether or not the framework should be used as a budgetary measure.

The ECC select committee has also scrutinised the LCF and its application. Committee chair Angus Macneil questioned whether the framework was “the biggest state secret” after he heard that numerous Freedom of Information requests issued by the Solar Trade Association were rejected, DECC having concluded them to be “manifestly unreasonable”.

DECC has repeatedly rebuffed attempts from MPs and people within the renewables industry to gain greater clarity over the LCF and claimed divulging the information would break commercial confidentiality agreements.

Seb Berry, head of external affairs at Solarcentury, said that the government had been “crystal clear” about the support for renewables, but that it had “all changed on 13 May 2014”.

“The High Court accepted that the government had acted retrospectively, but that the constraints of the LCF made this an acceptable risk for investors and lawful policy. But without investor and stakeholder confidence in policy, risky projects will cost a lot more or not be built at all,” he said.

Jonathan Selwyn, managing director at Lark Energy, meanwhile said that DECC’s setting of grace period deadlines was a “calculated cynical ploy”.

“It’s designed to create the maximum disruption in the market and with immediate effect, which is why we pursued the case in the first place.” 

Tomorrow’s hearing is not the only time DECC stands to be up in court early this year, with five other UK developers having launched proceedings last month over the removal of grandfathering rights under the RO. The department has also yet to settle damages owed to installers over cuts made to the feed-in tariff made in 2011.

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