Government loses FIT appeal

The Court of Appeal has declared that government plans to cut the feed-in tariff (FIT) for solar electricity from 12 December are illegal.

The court was unanimous it its decision to refuse the government permission to appeal, meaning the government will have no automatic right to escalate its appeal to the Supreme Court.

The decision means the Department for Energy and Climate Change (DECC) will not be able to go ahead with plans to cut solar subsidies for installations completed after 12 December from 1 April.

Last October, the government proposed to cut the FIT for solar electricity in half. Installations registered after 12 December would only receive the current tariff of 43p per kWh until 31 March 2012, when they would be moved to a lower tariff of 21p per kWh.

However, the consultation remained open until 23 December. Solar firms were successful in getting the consultation ruled illegal by the High Court on the grounds that it applied retrospectively. But the government then appealed this decision.

Today, the Court of Appeal upheld the High Court’s decision.

Lord Justice Moses said that the scheme relied upon people getting paid the rate that was in place at the time their solar electricity panels were installed and registered. He concluded any effort by the government to change that without forward notice was retrospective.

“The question, I respectfully suggest, is […] whether Parliament conferred a power to make a modification with such a retrospective effect,” he said. “It did not.”

Lord Justice Richards and Lord Justice Lloyd supported Lord Justice Moses.

Andy Atkins, director of Friends of the Earth, said: “This landmark judgement confirms that devastating government plans to rush through cuts to solar payments are illegal - and will prevent Ministers from causing industry chaos with similar cuts in future.”

The ongoing legal battle has been a source of uncertainty for the industry with solar installers complaining it is difficult to sell their products without being able to offer clarity to customers on what FIT they will receive.

Daniel Green, chief executive of HomeSun, one of the solar firms which brought the challenge, said it offered certainty in the future “as long as we don’t have to come up against DECC every time they make an announcement”.

DECC is currently considering whether to take its case to the Supreme Court, where it would have to request permission for its case to be heard.

Last week, the government removed some of this uncertainty by tabling regulations in parliament which will see the FIT for installations after 3 March receive the lower rate.

But following today’s judgement Paul Reeve, head of environment at the Electrical contractors Association, said: “Before anyone celebrates, we should remember that future funding for the FIT is not unlimited. Some of the available cash could now be used up in a second ‘rush to install’ before 3 March, when the FIT will be halved to 21p per kWh.”

Solar installations rose 300% between the start of the consultation and the 12 December, when compared to the six weeks prior to DECC announcing its plans.