Energy News

Government loses legal bid to cut solar panel tariff

Wednesday 25 January, 2012

By Martin Fagan

Homeowners have been given a short-term window of opportunity to enjoy a solar power “gold rush”.

The government’s decision to slash the rates paid to householders who generate their own solar electricity has been blocked by the court of appeal.

In a blow to the Department of Energy and Climate Change’s (DECC) plans, the court today ruled the government’s plans to push through sudden cuts to solar tariff payments are illegal. The government is now seeking permission to appeal to the supreme court.

The ruling means that any solar PV (photovoltaic) installations installed, commissioned and registered between 12 December last year and 3 March this year will receive the higher feed-in tariff rate of 43.3p for the next 25 years. The solar energy sector says homeowners have been given a short-term window of opportunity to enjoy a solar power “gold rush”.

In October 2011, the government announced it was slashing the feed-in tariff on solar energy and only solar panels installed and registered before 12 December would get the higher rate. Solar panels registered after the deadline would get the cheaper rate.

The feed-in tariff pays solar panel owners for the electricity their panels generate, regardless of whether the energy is used by the household or fed into the National Grid. The government’s plans were to reduce the feed-in tariff to 21p per kilowatt hour (kWh) from the current 43.3p per kWh plus an additional 3.1p per kWh for energy exported to the National Grid.

According to figures from the Energy Saving Trust (EST) based on the old tariff, this means a typical return of £1,190 a year. All returns from the feed-in tariff are tax-free and the rate is guaranteed to rise with inflation for the next 25 years.

“This is an almighty kick in the teeth for the government, but a fantastic result for consumers who have either gone ahead with an installation since 12 December or are keen to do so now,” said David Hunt, director with renewable energy company Eco Environments.

Friends of the Earth's executive director Andy Atkins said: "This landmark judgement confirms the government’s devastating plans to rush through cuts to solar payments are illegal. The government must now take steps to safeguard the UK's solar industry and the 29,000 jobs still facing the chop.”

Sounding a note of caution on the ruling, energy expert at watchdog Consumer Focus, Liz Lainé, said: “If consumers choose to install solar panels before 3 March they may qualify for the higher tariff rate. But we would urge people to calculate the potential benefits to them on the basis of the lower rate proposed by government, so they don’t end up with a lower return than they expected.”

The full consultation on the feed-in tariff rates for solar and other technologies is due for release on 9 February. The renewable energy industry hopes this will give a clear picture of the rates from April 2012 and beyond.

Photo by joncallas