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Government lodges feed-in tariff ruling appeal

The Government has lodged an appeal against last month's High Court ruling that its proposals to reduce solar panel energy generation subsidies was "legally flawed", it has confirmed.05 Jan 2012

Solar companies SolarCentury and HomeSun, together with environmental pressure group Friends of the Earth, successfully argued that Government's timetable for cutting feed-in tariffs (FiTs) to businesses and homes which generate their own energy by as much as 50%, was unlawful.

The proposed cuts, contained in a Department of Energy and Climate Change (DECC) consultation, would have applied to solar photovoltaic (PV) installations in working order and licensed after 12 December 2011 – 11 days before the consultation ended.  

A spokesperson from the Department of Energy and Climate Change (DECC) said that the Government hoped that permission to appeal would be granted, despite the High Court ruling that it had "no realistic prospect" of winning.

"The High Court's decision was based on the view that the proposed approach to implementing new tariffs for solar PV is inconsistent with the FiT scheme's statutory purpose of encouraging small-scale low-carbon electricity generation. We disagree with this for a number of reasons," the spokesperson said.

"Without an urgent reduction in the current tariffs, which give a very generous return, the budget for the scheme would be severely depleted and there would be very little available for future solar PV generators, or for other technologies. Our view is that the urgent steps we have proposed to protect the scheme for the future are fully consistent with the scheme's statutory purpose."

The spokesperson added that the judicial review was premature as the Government was yet to make a final decision on the future of feed-in tariffs for solar PV.

"A decision will only be taken after a full analysis of the responses to the consultation," the spokesperson said.

The FiTs scheme was introduced on 1 April 2010 to encourage the generation of electricity through renewable sources, providing a financial incentive for surplus electricity generated that is transferred back to the national grid. Since August 2011, new entrants to the FiTs scheme have been subject to new reduced rates for medium-scale projects between 150 kilowatt hours (kWh) and 250kWh capacity, to 15p/kWH; while larger projects over 250kWh capacity are now subject to rates of 8.5p/kWh and projects between 50kWh and 150kWh capacity to rates of `9p/kWh. The recent DECC consultation proposed cutting the tariff for schemes which generate up to 4kWh of electricity from 43.3p/kWh to 21p/kWh. Reduced rates were also proposed for schemes between 4kWh and 250kWH, and for scheme owners who receive payments for multiple installations at different sites.

Commenting on the High Court decision energy law expert Simon Hobday of Pinsent Masons, the law firm behind Out-Law.com, said that the ruling would not necessarily force the Government to change its future plans for the solar industry. If it is not granted an appeal or loses its case it may have to revise the implementation timeframe or reissue the consultation, he said.

Friends of the Earth and Labour's Shadow Energy and Climate Change Secretary Caroline Flint said that the Government's appeal would create "even more uncertainty" and waste taxpayers' money.

Andrew Pendleton, Head of Campaigns with Friends of the Earth insisted that the Government could fund FiTs with the tax revenue generated by the scheme. "Ministers should end business uncertainty and protect jobs with a clear plan to reduce payments from February - in line with falling installation costs," he said.

Flint said that the Government needed to instead "go back to the drawing board and bring forward more measured proposals" that would guarantee the continued growth of the solar industry.

The Court of Appeal reopens after its Christmas recess on 11 January.

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