Government faces £140m solar compensation bill

The government is facing claims totalling £140m for losses following its illegal cuts to the solar feed-in-tariff after the number of firms claiming compensation doubled.

Among the 17 claimants are contractor Breyer Group, which is claiming that the cut cost it £6.3m in lost business.

The number of firms taking legal action against the government has ballooned since July 2012 when three firms lodged a claim for £2.2m for lost business as a result of the cuts.

In October the claim reached £50m as a further five firms joined.

The legal action was started after the Department of Energy and Climate Change  announced in October 2011 that it would slash by half the feed-in-tariff (FIT) for solar power, which is paid to those people that install solar panels on their property for the power generated. The announcement prompted a slump in the industry with installations falling 97%.

The move was subsequently ruled illegal by the High Court because the 12 December cut off date stipulated by the government was before the government’s consultation on the change had ended.

Shadow energy secretary Caroline Flint said tax payers were being asked to “foot the bill for the government’s incompetence”.

She added: “Thousands of people lost their jobs, many businesses in the solar industry saw their order books dry up and the number of people installing solar panels slumped. Ministers must come clean about why they pushed ahead with their unlawful plans and what legal advice they got in the first place.”

Simon Gillett, chief executive of solar firm E-tricity, one of the claimants, said his firm had been forced to let 30% of its staff go because of the cut.

He added: “Last year should have been our year for growth, innovation, investment and training, but instead it was an ‘annus horriblus’ peppered with cut backs, customer confusion, part time working, stress and redundancies.”

However, Gillett said the cost control mechanism for the tariff, which was introduced in August 2012, had helped stabilised the market or solar.

A spokesperson for DECC said: “The department does not accept it has any liability and we will vigorously defend our position.”