The new Energy Secretary, Ed Davey, (who replaced the previous secretary in slightly ignominious circumstances) has been defeated in a battle begun by his predecessor and ended by the Supreme Court.
Legal action against the Department for Energy and Climate Change (DECC) began back in November, when a group of solar companies acted together to enforce an injunction stopping the DECC from using 12 December as the cut-off date for existing FITs on the basis that it was “illegal, irrational and unreasonable”.
The Government had earlier proposed to reduce Feed in Tariffs (FITs) for private users by more than 50% and for multiple installation owners (like housing associations) by even more (read our article for more details here), but industry stakeholders believed the moves would threaten thousands of jobs in the solar industry. Most importantly, they thought it was wrong for the policy to be implemented weeks before the consultation ended – seemingly nullifying the consultation altogether.
The injunction was successfully granted in December 2011 by the High Court and, despite an appeal with the same court and a subsequent request for appeal to the Supreme Court, which was quashed in March of this year, the original judgement has been upheld.
The cost to the Government is substantial. Tens of thousands of homeowners, those that installed solar equipment between 12 December 2011 and 4 March 2012, will be due the 43p per kWh they were originally promised, as opposed to the 21p the Government attempted to unlawfully impose. The Government estimates that between 30,000-60,000 installations were carried out during that period, resulting in a potential cost of £700 million.
In order to pay this, energy bills might bear the brunt of the load, increasing by £8 or so per household.
Nevertheless, since legal action began, the situation has moved on. The Government has succeeded in reducing the Tariffs permanently from March 2nd, with proposals to cut the rate further in July, down to just 13.6p/kWh. In total, that is a 68% fall since December.
Although some industry stakeholders are claiming that the reductions have decimated the industry and cost thousands of jobs, there has actually been a rush to install solar panels and take advantage of the higher rates before March 2nd. Companies are also predicting a rush before the July reduction.
On this logic, some would comment that perhaps it would have been better for the Government to enact reductions two pennies at a time in one or two month intervals? The amount of people rushing to take advantage of the temporarily higher rates, akin to motorists stocking up on petrol anticipating a price rise, might have resulted in a ‘rush for the finish’ and two years of fast solar growth.