Government plans to rush through cuts to solar tariff payments are illegal, the High Court ruled today (Wednesday 21 December), following a legal challenge by Friends of the Earth and two solar firms – Solarcentury and HomeSun.

The court agreed that proposals to cut feed-in tariff payments for any solar scheme completed after 12 December – 11 days before the official consultation closed – were unlawful.

Friends of the Earth is urging the Government to come up with a new proposal which would allow solar payments to fall in line with reduced installation costs, while ensuring the solar industry continues to play a key part in developing a cleaner future.

The environmental campaigning charity is also calling for more money to encourage solar installations – paid for by the revenue the industry raises for the Treasury, the removal of planned restrictions that would prevent poorer households from installing solar panels and more support for community-owned schemes.

The Government’s own independent advisors say the economy must be weaned off of increasingly expensive fossil fuels like gas by investing in clean energy and slashing energy waste. Friends of the Earth’s Final Demand campaign is urging the Government to launch an investigation into the role of the Big Six energy firms in stopping people in Britain having energy we can all afford.

Friends of the Earth’s Executive Director Andy Atkins said:

“These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs.

“We hope this ruling will prevent Ministers rushing through damaging changes to clean energy subsidies – giving solar firms a much-needed confidence boost.

“Ministers must now come up with a sensible plan that protects the UK’s solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.”

“Solar payments should fall in line with falling installation costs but the speed of the Government’s proposals threatened to devastate the entire industry.”

The High Court has agreed to hear applications by Friends of the Earth and two solar companies – Solarcentury and HomeSun – for permission to challenge Government plans to slash financial incentives for solar electricity on Thursday 15 December 2011.

Confirmation of the hearing follows an earlier High Court ruling [Friday 25 November 2011] rejecting permission for a legal challenge. The organisations are now asking the High Court to reverse the decision and allow a hearing into the legal challenges as soon as possible.

Friends of the Earth is also asking the High Court to cap its potential legal costs for the case. International rules specify that costs should be limited in public interest cases on the environment.

The legal challenges centre around Government plans to slash feed-in tariff subsidies – payments made to households and communities that generate green electricity through solar panels – on any installations completed after 12 December this year. The Government is currently running a consultation into feed-in tariffs – but the 12 December cut-off point comes two weeks before the consultation ends. Friends of the Earth says this premature decision is unlawful and has already led to unfinished or planned projects being abandoned.

Solar is a growing, successful industry. The premature cuts could cost up to 29,000 jobs and lose the Treasury up to £230 million a year in tax income, a report commissioned by Friends of the Earth and Cut Don’t Kill – an alliance of solar firms and consumer and environmental organisations – revealed last month. Last week construction firm Carillion warned 4,500 workers their jobs are at risk because of the Government’s proposals.

Friends of the Earth’s Executive Director Andy Atkins said:

“We strongly believe Government plans to abruptly slash solar subsidies are illegal, we hope the High Court agrees to allow our case to be heard as soon as possible.

“We’ve also asked the High Court to cap our potential costs. International rules say this should be allowed in public interest cases on the environment – we can’t afford to bring a challenge if we face unlimited liability for the other side’s legal fees.

“In a time of economic gloom, the solar industry has been one of the UK’s brightest success stories, enabling homes and communities across the country to free themselves from expensive fossil fuels.

“It’s short sighted for Ministers to move the goalposts and prematurely pull the subsidy – this will cost tens of thousands of jobs, bankrupt businesses and reduce Treasury income by up to £230m a year.”

As the Government’s solar energy Feed in Tariff is reduced to 21p per kilowatt generated, and the 2012 deadline brought forward; consumers have been left confused as to what this means for the future of solar energy in the UK.

Save Energy Renewables, part of the Save Energy Group, has been in the renewable energy sector since 2002, long before the government feed in tariff was introduced in April 2010.  The introduction of the tariff, at 41p per kilowatt generated, was designed to kick start the take up of renewable energy in the UK and bring us in line with leading European countries such as Germany.  In its second year the tariff increased to 43.3p, but was widely regarded by the industry as high and unlikely to sustain.

The tariff is reviewed on an annual basis and was due to change again from March 31^st 2012, with much speculation as to what that might be.  The announcement came on the 31^st October that the new figure would be reduced to 21p, however, what the industry was not expecting was the 12^th December 2011 cut off point – fast-tracked from the original 2012 deadline.  Therefore, only solar PV systems installed and commissioned by this date would be eligible for the 43.3p tariff.  This put an unprecedented strain on the renewable energy industry, and will almost certainly result in many smaller companies, or those with a less than perfect infrastructure going out of business.

As to why this date was brought forward, lies heavily in the surge for ‘free solar’ with companies setting up to take advantage of the tariff by renting roof space from consumers who benefited from reduced energy bills, while they reap earnings from the tariff for the next twenty five years.  The budget put in place to assist homeowners simply ran out.

The new tariff rate of 21p is now set at a sustainable level for the long term. It will ensure the tariff is available for its predicted lifespan, until the cost of the energy rises to meet the percentage that can be earned through the tariff – namely grid parity.   Steve Randall, Sales & Marketing Director: “This is extremely good news and represents a very healthy 8-10% increasing return on investment for those who choose renewable energy as the way forward.  It also represents twice what can be achieved by the high street banks.  As a business we count ourselves among the lucky ones, with a strong infrastructure both logistically and financially.  As we have been in the business for over a decade we also have strong buying power with suppliers, savings we can pass to our customers.”

Solar energy has been embraced by the UK for many years due to the inevitable savings on energy bills.  The fact that the cost of energy will only rise will see consumers continue to do so with the added benefit of the feed in tariff which is all the more attractive here in the South which enjoys far longer hours of daylight than the North.

Steve Randall concludes:  “The best way for consumers to judge whether solar energy is for them is to look at their electricity bill today, and multiply that by the life of the tariff which is twenty five years.  The option is rent your energy at a rising cost per year, or take ownership of it today. There is further good news in the marketplace as we have seen product prices lower and level out, so when visitors come to our showroom we are able to share more attractive pricing terms.

steve.randall@saveenergygroup.co.uk