Solar legal claim could rise above £100m

The legal action against the government from solar firms claiming lost earnings caused by illegal changes to the solar electricity feed-in tariff could swell to more than £100m, sources have claimed.

The firms claim they lost millions of pounds worth of business after the government announced in October 2011 that it would slash by half the feed-in tariff (FIT) for solar power, which is paid to people who 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.

Ministers must come clean about why they pushed ahead with their unlawful plans

Caroline Flint, shadow energy secretary

Last week, three solar companies announced that they would escalate their claim for £2.2m in damages to the High Court after the Department of Energy and Climate Change (DECC) declined their original request for the money.

Prospect Law, the firm handling the claim, said it expected more firms to join the case before the end of October.

Building understands several firms are already queuing up to join the action, and sources close to the claim said it could grow to over £100m as more come on board.

The boss of one solar company told Building that last year he had an offer from investors to buy his entire business for £120m but that this offer was then dropped in the light of the government’s announcement. He said he was considering joining the action.

Another said he had lost “around £20m” of revenue after the cut.

Shadow energy secretary Caroline Flint said that it was “unforgivable” that “hard-pressed taxpayers are now left to foot the bill for this government’s incompetence”.

She said: “For months Labour warned that the government’s cuts to the feed-in tariff for solar power went too far and too fast.

“Thousands of people have lost their jobs, many businesses in the solar industry have seen their order books dry up and the number of people installing solar panels has collapsed following the latest round of cuts in August.

“Ministers must come clean about why they pushed ahead with their unlawful plans and what legal advice they got in the first place.”

A DECC spokesperson said the department “will respond in due course” to the claim.