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Government announces March contingency date for solar feed-in tariff increases

If the Government loses its appeal against its proposal to reduce further solar incentives from December 2011 then it will apply the reduction from 3 March 2012, it has said.20 Jan 2012

The Department of Energy and Climate Change (DECC) has confirmed the contingency plan it is putting in place if it loses its appeal against a recent High Court ruling declaring its proposed reduction to Feed-in Tariffs (FiTs) "legally flawed".

In line with the Government's contingency plans, reduced solar FiTs, which provide a financial incentive for surplus electricity generated from renewable sources that is transferred back to the national grid, will come into force on 1 April 2012. As of this date, the new rates will apply to energy generated by solar photovoltaic (PV) installations which generate up to 4 kilowatt hours (kWh) of electricity which are in working order and licensed after 3 March. Draft licence modifications were laid before Parliament on 19 January 2012.

The Government has now said that the reductions will apply to new installations completed after 3 March 2012 if it loses its judicial review.

Last week the Government lodged an appeal against last month's High Court ruling that its proposal to reduce FiTs for solar PV installations completed after 12 December 2011 – 11 days before its consultation on the new rates ended – was "legally flawed".

Environmental pressure group Friends of the Earth, together with solar companies SolarCentury and HomeSun, successfully argued that the timetable for cutting FiTs for smaller schemes from 43.3p/kWh to 21p/kWh was unlawful.

Energy Minister Greg Barker said that the Government wanted to do its best to reduce uncertainty in the sector as a result of its legal challenge at what was a "difficult time" for businesses in the industry.

"We must reduce the level of FiTs for solar panels as quickly as possible, to protect consumer bills and to avoid bust in the whole feed-in tariff budget," he said.

He confirmed that the new 2012 date for a reduction to FiTs was a "contingency" that would only apply if the Court of Appeal ruled against the Government.

"If successful, we retain the option of introducing a December reference date [but] in the circumstances we believe this gives the industry as much certainty as is possible," he said.

In his written statement to Parliament, Barker added that it was important to stand by its original December reference date if possible because the existing rates "take a disproportionate share of the budget available for small-scale low-carbon technologies".

"We want instead to maximise the number of installations that are possible within the available budget rather than use available subsidy to pay a higher tariff to a smaller number of installations," he added.

The Government said that it had received over 2,000 responses to its consultation, which closed on 23 December 2011.

In its provisional response (12-page / 485KB PDF) it said that it would announce the outcome of other aspects of the consultation process - including a decision on its proposals for scheme owners who receive FiT payments for multiple installations at different sites and a new energy efficiency requirement - by 9 February 2012. It added that proposals for the next phase of its review of the scheme, which will be subject to further public consultation, should accompany any future announcement.

Friends of the Earth Executive Director Andy Atkins called on ministers to reinvest the "multi-million pound tax revenues generated by solar firms" back into the industry.

"Ministers must urgently use the millions of pounds in tax that solar firms generate to safeguard this industry and the jobs and businesses it has created," he said.

The charity said that the Government's proposals had already resulted in "countless" planned clean energy schemes being abandoned and thousands of jobs – including 4,500 workers with construction firm Carillion - under threat.

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