Tuesday, 27 December 2011

Court blow to solar power subsidy cut

16 Dec 2011

Government plans to slash solar power subsidies were dealt a blow yesterday, after a High Court judge ordered an urgent hearing into the move. Mr Justice Mitting ordered a judicial review to be held next week into the Government's decision to halve so-called feed-in tariff solar power subsidies after hearing an application by Friends of the Earth. In a joint application with the photovoltaic companies, Solarcentury and HomeSun, Friends of the Earth argued that the Government's decision to introduce the subsidy cut on Monday-11 days before the consultation period ends on 23 December-was illegal.

On Monday, the tariff subsidy fell from 43.3p per kW to 21p, just six weeks after the proposals were announced. After a three-hour hearing yesterday, Mr Justice Mitting said the proposals had given rise to "economic risk" for those individuals and companies engaged in the solar industry, and that the challenge should be heard as a matter of urgency next Tuesday and Wednesday.

If the judge finds the Government behaved unlawfully, the consultation will need to begin again, adding weeks, or possibly months, to the date when a new tariff rate can be introduced. Daniel Green, the chief executive of HomeSun, said: "Having an 'effective date' in the middle of a consultation is not only unlawful but it could set a dangerous precedent for all future government consultations. "It's a bit like having a trial and executing the defendant halfway through", he added.

Andy Atkins, Friends of the Earth's executive director, said: "We're delighted the High Court has given the go-ahead to our legal challenge-we believe government plans to abruptly slash solar subsidies are not only unfair, but illegal. These proposals have already had a disastrous impact on the solar industry". Mr Atkins added: "Fledgling clean businesses have had the rug pulled from under their feet and a shadow hangs over thousands of jobs".

Friends of the Earth warns that between 18,000 and 29,000 of UK solar industry jobs are at risk from the subsidy cuts, along with as much as £230m of annual VAT and income tax revenues. Furthermore, opponents to the subsidy cut argue that the swift and dramatic reduction in solar tariffs has undermined confidence among potential investors across the energy industry who can no longer be sure the Government won't "move the goalposts" in other areas. The decision to hold a judicial hearing into the solar power subsidy cut comes a week after the European Commission threatened its own action over the Government's move.