The government has lost its appeal against the High Court judgement that its decision to retrospectively cut solar tariffs was legally flawed.
The government solar panel subsidies currently pay a tariff of 43p per kilowatt hour for the electricity that solar panels can make. A number of businesses have taken advantage of the scheme and are now reliant on the tariff to make the installation profitable. Other council run-schemes also ‘piggyback’ onto this scheme.
The tariff will drop to 21p per kilowatt hour for any solar panels installed after the beginning of March 2012. However, the government had tried to retrospectively change the date to include any panels installed after 12 December in the reduced rate.
A challenge in the High Court deemed that the move was legally flawed and the latest announcement from the Court of Appeals has backed up the initial decision.
The government are keen to press on with their case and have indicated that they will raise another appeal in the Supreme Court.
The government argue that paying the current tariff on installations between December and March will cost them £1.5 billion in the next 25 years. By cutting the rate, they say they will ensure the long-term sustainability of the scheme. They also indicated that the costs of installing solar panels have fallen since the scheme began and the new tariff reflected that.
Chris Huhne, the Energy and Climate Change Secretary, pointed out that by reducing the tariff, the government hope to maximise the number of solar panel installations and remain within their budget for the scheme.
However, the move had angered many people in the solar industry. They indicated that it pulled the rug from underneath many projects that had been commissioned and even some which had already been installed. Many businesses have warned that the way in which the tariff cut has been handled is likely to cost thousands of people their jobs.
A spokesperson from the Confederation of British Industry (CBI) has called for the government to draw a line under the saga. They point out that the initial decision and the subsequent appeal have already undermined confidence in the solar industry. A second appeal will cause further uncertainty for those who are having their panels installed between December and March.
Liz Laine from Consumer Focus pointed out that many customers want to be certain of what to expect when they sign up for an energy efficiency deal and that an ongoing legal battle will probably undermine consumer confidence.
Ms Laine added: ‘If consumers choose to install solar panels before 3 March they may qualify for the higher tariff-rate. But we would urge people to calculate the potential benefits to them on the basis of the lower rate proposed by Government, so they don’t end up with a lower return than they expected. It is worth being aware that it takes four weeks on average for installation and registration, and paperwork delays and bad weather could also add on extra time.”