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Solar News 25 Jan 2012. New Solar Gold Rush as UK Government Loses Second PV FIT Cuts Case.

Filed under: Latest News

Solar PV FIT cuts news UK 25 January 2012.

43.3p Solar PV FIT looks increasingly likely for a brief manic “use it or lose it” 5 week window.

Barrister Edmund Robb is confident that the Supreme Court will refuse the DECC’s second appeal and has said so publicly. This would mean the full 43.3p solar PV FIT until 3 March. Here’s his quote.

The Micropower Council, of which we are members, says: “Today’s news does not therefore remove all uncertainty, but in our view it significantly increases the probability that a 43p/kWh tariff will apply to [domestic solar PV] systems installed up to and including 2nd March. Here is the MPC article.

On 25 January 2012, the UK government lost, for the second time, their case to retrospectively cut solar PV subsidy tariffs from 43.3p to 21p. Consequently, UK’s nationwide solar PV sales pitch is now:

“Wake up! Order solar PV in the next fortnight, for installing by 3 March, to have any chance of upping your 21p tariff to 43p.”

Unanimity. All three High Court judges were unanimous that government was acting unlawfully.

So, what does this mean for the domestic solar PV customer? If (and only if) the Court of Appeal finding eventually stands, then:

  • Solar installations registered between 12 December 2011 – 3 March 2012 will attract the 43.3p/kWh rate (index-linked) for 25 years
  • Installations registered on or after 3 March will only briefly attract 43.3p/kWh, and only until 1 April at which point they will receive 21 p/kWh (index linked) for the remainder of the 25 years.
  • Installations from 1 April until the next reduction date will attract 21 p/kWh (index linked) for 25 years. But these may have further conditions attached, such as costly home energy efficiency upgrades to EPC level C.

But nothing is 100% certain in the UK solar world, because even though it has lost twice, and has already spent a six figure sum on doing so, our government says it WILL appeal once again, this time to the Supreme Court. The Government have been awarded permission to appeal, on the grounds that today’s Judgement was slightly different to the earlier judgment, that of the High Court. So government have asked the Court of Appeal for permission to appeal.

How long will this next court action take? Opinion is divided on the answer. One early media report said we might know whether they receive this permission “in the next few days”. However this sounds like optimism because the the Supreme Court has today warned that if Government decides to launch a feed-in tariff appeal, it could take up to a year to be heard. Checking up on procedures with the Supreme Court this afternoon a researcher for Solar Power Portal established that if DECC’s case is taken on, and it may never be taken on, if so, it is likely to take several months to even start.

We will first have to decide whether the case fits the Supreme Court’s criteria – a process which can take several weeks. If the case is viewed as appropriate to be heard, then it can then take several months to reach the courtrooms due to the availability of barristers coupled with the availability of the court.” they clarified to Solar Power Portal.

So DECC’s next appeal may take a year! Its result will be merely academic from the point of view of the solar industry, but probably not for a few legal bods.

In summary, unless Government obtains and wins this appeal, 21p is certain while 43.4p looks like a possible rate for installations installed by 3 March.

So hurry! UK again appears to, perhaps, have the most generous solar PV tariff in the world.

In response to the 43.3p / 21p uncertainty, Solartwin are now offering to risk-share for January solar PV orders only: if you want to buy solar PV now, we will share some of the the risk of a 21p rate happening with you because we will allow you to withhold 10% of your invoice if you end up getting 21p or less.

As for the government’s risk management, Plan B now running. DECC says the solar PV cuts must happen to protect the FIT budget. While it may appeal, it will now introduce its Plan B contingency plans announced last week. These pave they way legally to delay the eligibility date for a reduced FiT rate to March 3 2012. The key FiT being reduced is from 43.3p to 21p per kWh for small (ie domestic) solar PV installations up to four kilowatts in size.

Quotes of interest;

DECC Minister Greg Barker tweeted: “#solar, Win, lose or draw today, important we move forward together, drive down costs + step up deployment.”

DECC Minister Chris Huhne: “We want to maximize 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.”

DECC, as reported by BPVA say: “The minimum tariff for installation between December 12th 2011 to March 3rd 2012 will be 21p. If the Government loses the appeal in the Supreme Court, then these installations will get the higher rate of 43.3 p until March 3rd.”

DECC on 26 January 2011 said: “Yesterday, the Court of Appeal handed down a negative judgment on the Government’s appeal against an earlier decision by the High Court. We respectfully disagree with the judgment and are seeking permission to appeal to the Supreme Court. In the light of that, we cannot rule out the possibility that lower tariffs could be applied to installations which became eligible for FITs on or after the proposed reference date.  It is important that consumers are aware of this. The reason for appealing is that we want to maximise the number of installations that are possible within the available budget for FITs, 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.”

Jeremy Leggett, Chairman, Solarcentury said:”A historic judgement has been made today, one that should be welcomed by the entire renewable energy industry. Renewables can only play the pivotal role necessary to deliver a new green economy, if we have a stable market and investor confidence backed by lawful, predictable and carefully considered policy. Today we have reminded government that it will be held to account when it acts illegally and tries to push through unlawful policy changes. We would much prefer not to have taken this path but Ministers gave us no choice. Our hope now is that we can work together again to restore the thriving jobs rich solar sector that has been so badly undermined by government actions since October.”

Ben Wilson of the Supreme Court says it would take eight weeks before three senior judges could even decide if permission for the appeal can be be heard at all. “It will take this long to prepare and lodge the papers,” he said. “And then, on the basis of the written submissions, it would be for the Supreme Court Justices to decide if there is a significant issue regarding a point of law of importance to the general public.” He then explained that if DECC is successful in seeking a final hearing, it would then take a further six months to organise it. “This will probably take a year to reach the Supreme Court,” Ben added. “If there is a case for the matter to be heard urgently this period of time can be contracted – but not significantly.”

Edward de la Billiere of Prospect Law, representing Solarcentury: “A unanimous ruling like this gives the legal certainty investors need before they invest in micro-renewables in the UK. It goes wider than the original challenge, about the 12 December deadline, and makes clear that DECC cannot retrospectively change the rate of the FIT for people who are locked into it. It should give great comfort to everyone from the domestic owner of a system to those investing indirectly in this sector and will I expect attract overseas money into this new and burgeoning industry. This judgment is solid enough to be a good day for business and for Britain’s green energy obligations.”

Edmund Robb, Barrister and Director at U.K.-based Prospect Law Ltd says the Supreme Court permission process could take months. Edmund Robb is confident that the Supreme Court will refuse the DECC’s second appeal. “… further down the line, DECC may well choose quietly to drop any application to appeal once the PR ‘heat’ has gone out of the FITS/PV story and the new payment rates have come into effect after 03/03/2012 … DECC’s strategy appears to be designed: (i) to save face amongst ministers and their advisors; and (ii) to further perpetuate a sense of uncertainty amongst consumers and the PV industry.”

Friends of the Earth’s Executive Director Andy Atkins: “…landmark judgement confirms that devastating government plans to rush through cuts to solar payments are illegal – and will prevent Ministers from causing industry chaos with similar cuts in future. The government must now take steps to safeguard the UK’s solar industry and the 29,000 jobs still facing the chop.”

The Solar Trade Association has told its members (of which we are not one): “The process going forward is that Government has formally asked the Appeal Court for permission to take this matter to the Supreme Court.  This however does not necessarily mean Ministers have decided it will do so – at the moment they may simply be keeping the option open.  The Appeal Court judges will make a decision on whether to grant permission in the next few days – if it is granted, the case can go to the Supreme Court.  If permission is refused the Government would still have the fall back option of applying to the Supreme Court itself for permission to appeal.  But this would add a further step in the process – and at each step the chances of success for Ministers recede a little further.

The British Photovoltaic Association, UK’s largest solar trade body, said in a statement that although they believe that the PV FIT cuts were illegal, they decided over-all it was best for industry not to challenge DECC, thus exposing an industry rift and suggesting that a majority of the solar industry were not in favor of the court action in terms of the risk of budget depletion. The existence of this rift begs the cynical question of whether gaining cost-effective PR featured in any way the “do I or don’t I take them on” considerations of DECC’s main opponents.

REA Press Statement: “The REA is calling on all parties to now draw a line under the affair and allow the UK solar industry to get back to business. As long as DECC makes no further appeal, installers will at last be able to give customers prices with absolute certainty, and get back to business.”

REA told members on 26 Jan, presumably in response to a “cool it” briefing from DECC: “The Court of Appeal hasn’t granted DECC permission for a further appeal, but DECC is seeking permission directly from the Supreme Court and has 28 days in which to do so.  Were they granted leave to appeal and the appeal was successful (and it could take up to one year before the final outcome is known) they could still legislate to apply new tariffs from the 12 December 2011 reference date.  Hence DECC is warning firms not to promote the higher tariffs in the period to 3rd March 2012 as these cannot be guaranteed.”

Gaynor Hartnell, Chief Executive of the REA, as usual, took a wider than just PV-focussed view, saying: “We now want to put this behind us as swiftly as possible, and work with government and supporters to secure a larger budget for small-scale renewable energy generation…”

Barry Johnston MD of Solar Twin Ltd says: We agree with Gaynor’s broad perspective. The UK renewable technology market needs balance and not selective privilege. For example, solar thermal faces zero support from 1 April and nobody is saying anything about, that following the mistaken ditching of solar thermal members into the the Solar Trade Association, who, themselves, have now abandoned their solar heating roots. Solar consumers need a £800 Renewable Heat Premium Payment right now, along with long term stability for PV.”

Some interesting links on this breaking story:

DECC’s Q&A for the press pdf download (some interesting spin)

 

Solar Power Portal (on a possible 1 year delay)

Reuters (global perspectives).

BBC News.

The Independent.

The Telegraph.

The Guardian.

Press Association.

Text of court’s full judgment.

Renewable Energy Association (brief statement)

Micropower Council (on significant increase in 43.3p probability)

Moneysavingexpert (is too gung-ho about 43.3p certainty)

Solar Century.

FoE Press Release.

PV Magazine (DECC’s delaying strategy and low chance of winning).

ClickGreen article (pointless 8 months plus to hear next appeal).

Channel 4 news video (6 mins) grills both DECC and STA.

“For solar PV, the next 5 weeks is not a “win or lose” situation for consumers, but more like “win or double-win”. People are assured 21p and may also get more than double. Plus prices are keener than ever. That is why our phones are so busy right now. Seizing the moment is the general picture right now.” observed Barry Johnston.


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