Latest News 25/01/2012
Government cut to solar tariffs blocked as appeal fails
The government has failed in an appeal against a decision which blocked its attempts to reduce solar subsidies.
The court case involved the government's move to halve the payments made to households with solar panels, which it says are unsustainable.
Solar businesses and campaigners had warned thousands of jobs could be lost as a result of the move.
Under the feed-in tariffs programme, people in Britain with solar panels are paid for the electricity they generate.
The decision will lead to widespread confusion over what the tariff level is.
The previous tariff was just over 43p per Kilowatt-hour generated.
The new tariff of 21p per kilowatt-hour had been expected to come into effect from 1 April.
But in October, the government said the reduced rate would be paid to anyone who installed their solar panels after 12 December, sparking anger from environmental groups and installers.
The government announced a consultation on the proposals, which closed on 23 December - 11 days after the decision was to have been implemented.
The High Court ruled that changing the tariffs in this way was "legally flawed", a ruling the Court of Appeal has now upheld.
The change had particularly upset industry as it affected projects which may already have been commissioned but not installed.
"This decision has very important implications for the whole renewable energy sector in the UK," said Ben Warren a partner at Ernst and Young.
"It is a clear message that retrospective adjustment of support is not acceptable,"
The government has put a contingency plan in place which would see the current tariff, of 43p, remain in place until the start of March.
However, they are also considering appealing in the Supreme Court against the latest ruling, potentially allowing them to return to the cut-off date of 12 December.
A DECC spokesperson said: "The Court of Appeal has upheld the High Court ruling on FITs. We are now considering our options."
They added that it meant there were "no guarantees" on any tariff consumers were offered after 12 December.
The tariff for surplus electricity exported to the national grid remains 3.1p per kilowatt-hour paid in addition to the tariff, and is unaffected by the changes.
19 January 2012
On 31 October 2011, the Government published a consultation on Feed-in Tariffs (FITs) for solar photovoltaics (PV). This was in response to a substantial increase in deployment of PV, prompted by falling prices, with levels at nearly double the original projections for the first two years of the scheme. The consultation set out proposals for responding to these developments, which were putting unsustainable pressure on the budget available for FITs.
The consultation sought views on whether to reduce the generation tariffs available for new solar PV installations to a more financially sustainable level. Among other things, it proposed applying the new generation tariffs from 1 April 2012 to all new solar PV installations with an eligibility date on or after an earlier “reference date”, which we proposed should be 12 December 2011. This reference date proposal has since been challenged by judicial review and the Government has sought an appeal of the decision of the High Court. We are now waiting for a judgment from the Court of Appeal and we cannot be sure of the date on which this will be issued.
We continue to stand by our original proposal. However, I know that the uncertainty while we await the Court’s decision is difficult for the industry. A retention of the 43p tariff could also create substantial risks to the FITs budget if our appeal is unsuccessful. For these reasons, we believe it is prudent to bring forward our decision on one aspect of the consultation: the proposals for new solar PV tariffs.
We are therefore laying before Parliament today some draft licence modifications which, subject to the Parliamentary process set out in the Energy Act 2008, makes provision for a reduced tariff rate (from 1 April 2012 onwards) for new PV installations with an eligibility date on or after 3 March 2012.
If the Court finds in favour of the Government’s appeal, we intend to stand by all our consultation proposals, including an earlier (December) reference date, subject to the Parliamentary procedure and consideration of consultation responses. It is very important that we reserve this as an option because these 43p payments will take a disproportionate share of the budget available for small-scale low-carbon technologies. We want instead to maximise the number of installations that are possible within the available budget rather than use available subsidy to pay a higher tariff to a smaller number of installations.
The consultation closed on 23 December 2011 and over 2,000 consultation responses were received which we have been analysing carefully. We are intending to announce the outcome of the consultation by 9 February 2012, in time for any resulting legislative changes to come into effect from 1 April 2012. Our aim is that this announcement will be accompanied by a set of reform proposals for the next phase of the comprehensive review of the FITs scheme, which will be the subject of a further consultation.
The new generation tariffs set out in the draft licence modifications being laid today are set out in the table below and would apply for all installations with an eligibility date on or after 3 March 2012. Further information on the Government’s response to this aspect of the consultation, together with a summary of the relevant consultation responses, is also being published today on the Department of Energy and Climate Change’s website and will be available from www.decc.gov.uk/FITs.
Band (kW Declared Net Capacity (DNC) Current generation tariff (p/kWh) New generation tariff from 1 April 2012 (p/kWh)
≤4kW (new build) 37.8 21.0
≤4kW (retrofit) 43.3 21.0
>4-10kW 37.8 16.8
>10-50kW 32.9 15.2
>50-100kW 19.0 12.9
>100-150kW 19.0 12.9
>150-250kW 15.0 12.9
>250kW-5MW 8.5 8.5
stand alone 8.5 8.5