UK Government plans to cut subsidies for solar panels on homes have been ruled legally flawed by the High Court.
The decision was a victory for environmental campaigners Friends of the Earth and two solar companies – Solarcentury and HomeSun – which challenged the proposals and said they were creating “huge economic uncertainty”.
Energy Secretary Chris Huhne wants to cut feed-in tariff subsidies (FITs) – payments made to households and communities which generate green electricity through solar panels – on any installations completed after December 12 this year.
Mr Justice Mitting, sitting in London, said yesterday that the minister was “proposing to make an unlawful decision”.
Friends of the Earth’s executive director Andy Atkins said after the decision was announced: “These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs.
“We hope this ruling will prevent ministers rushing through damaging changes to clean-energy subsidies, giving solar firms a much-needed confidence boost.
“Ministers must come up with a sensible plan that protects the UK’s solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.
“The speed of the government’s proposals threatened to devastate the industry.”
The cuts are being hurried in because the government believes they are too generous and costly in the face of the falling costs of solar technology and the number of people wanting to take advantage of the scheme.
Yesterday, Mr Justice Mitting said he was satisfied the government’s proposals were having “a significant impact” on the solar panel industry.
He said implementing Mr Huhne’s proposals in April next year by referring back to the December 12 deadline, which had fallen in the middle of a consultation period, would be unlawful.
He said the energy secretary was entitled to make modifications for “the statutory purpose” of promoting small-scale, low carbon electricity-generating schemes.
He added that changes made by reference to the earlier date of December 12 “are not in my judgment calculated to further that statutory purpose”, however.
He said: “On the contrary, they will tend to undermine the confidence of those participating in the market for small solar systems.”
He observed that significant capital was required to instal solar panels, and the payback for that investment under the FITs scheme took place over 25 years.
The judge refused the energy secretary permission to appeal against his ruling, saying his “prospects of success” were insufficient to justify permission.
The minister must now ask the Court of Appeal itself to hear his case.
The Local Government Association (LGA) said ministers had “undermined confidence” in its “green agenda”.
David Parsons, chairman of the LGA environment board, said: “By rushing through cuts to subsidies at such short notice, government caused the cancellation of thousands of solar panel installations and undermined confidence in its green agenda.
“Councils were left with little choice but to let down thousands of tenants who were counting on them for help, while losing tens of thousands of pounds tied up in deposits with contractors.
“While some of the damage caused by the clumsy handling of this cut cannot be undone, we now urge government to rethink subsidy cuts which in their current form would mean those in social housing receive a lower rate of subsidy.
“It is simply not right that those most in need of help paying for the installation of solar panels are entitled to the least support.
“Families in council and housing association homes have to pay, through their electricity bills, to subsidise the installation of solar panels for others.
“It is only right that they, along with community groups, are entitled to a fair share of that money too.
“Government now needs to rethink its proposals and develop a system of subsidy which is workable, affordable and fair.”
Consumer group Consumer Focus said a “realistic timetable” was needed.
Liz Laine, energy expert at Consumer Focus, said: “We think cuts in the solar subsidy are necessary.
“But they should not be made at the speed planned by the government and the scale of the cuts needs further consideration, particularly for social housing and community schemes.
“Six weeks is clearly not long enough to make such major changes and many consumers who had already signed contracts would have lost out under these moves.
“With such a big investment people need certainty.”
She added: “Today’s decision will undoubtedly see a major push from installers to capitalise on installing at the current subsidy rate.
“We’d urge consumers to make sure they think through any decisions, not be rushed by installers, and know their rights before they sign a contract.”
Howard Johns, chairman of the Solar Trade Association, said: “It’s great to have a decision today that the government have acted unlawfully because most of us felt that, but no one has come out and said it. But now they have it is a big victory.
“I think it was a black and white case. It was pretty obvious this was unlawful. We are one step closer to having some clarity – we’ll have to see what happens if there’s an appeal.”
