Victory for solar panel industry, defeat for government

Published:  25 January, 2012

Updated: DECC statement

LONDON: Solar companies are in a buoyant mood today. The Government's plan to overturn a High Court ruling that its bid to cut subsidies for solar panels on homes are unlawful, has been rejected.

Parliament did not have the power to make such a modification "with such a retrospective effect", said the Court of Appeal. The Government now has to pay costs for the solar industry and it has been refused permission to appeal.

If the plan had gone ahead opponents said, the proposals would have put 29 000 jobs in the solar industry at risk. Projects have already been abandoned and jobs have been lost due to the ongoing uncertainty.

"Almost everybody except DECC has appreciated the potential and importance of the solar industry," said Daniel Green, chief executive of HomeSun, a UK solar panel business founded in 2009. The company fits solar panels on the roofs of domestic dwellings for free in exchange for the householder's feed-in tariff grant.

A spokesperson from DECC said the Government was still "considering its options" in the wake of the ruling.

Caught out by the unexpected stampede to install panels after solar cells became cheaper, due to low-cost competition from China, the Government maintained that the high tariffs were "not sustainable".

Although Feed-in Tariff subsidies are paid through a small charge on consumers' electricity bills and not from government coffers, ministers put a cap on payments that were in danger of being exceeded.

Back in December, Tim Yeo, chairman of the Energy and Climate Change Committee was reported to have said: "There is no question that solar subsidies needed to be urgently reduced, but the Government has handled this clumsily.

"Ministers should have spotted the solar 'gold rush' much earlier. That way, subsidy levels could have been reduced in a more orderly way without delivering such a shock to the industry."

Solar panels have been much more popular than the Government could have suspected when it introduced the FiT scheme in April last year.

The cost of installing them has fallen by 30% since the scheme began. And, as wholesale gas prices have pushed up the cost of electricity, demand for solar panels has taken off.

As a result, about 90% of the funds that the Government wanted to be spent during the four-year FiT programme has already been allocated.

Updated: DECC statement in response

Energy and Climate Change Secretary Chris Huhne said: “The Court of Appeal has upheld the High Court ruling on FITs albeit on different grounds. We disagree and are seeking permission to appeal to the Supreme Court.

“We have already put before Parliament changes to the regulations that will bring a 21p rate into effect from April for solar pv installations from 3 March to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry.

“We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to half the number of installations. Solar PV can have strong and vibrant future in UK and we want a lasting FITs scheme to support that future and jobs in the industry.”

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