Isra-Mart srl: Solar sector mulls legal action over DECC's fast-track incentive review

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The government could face legal action from solar firms and green groups after announcing plans to hastily cut feed-in tariff subsidies for solar installations.

Photovoltaic manufacturers, installers, and Friends of the Earth yesterday warned the government that it had left itself open to legal action, after launching a fast-track review of feed-in tariffs, which might impact any project registered for the incentive scheme after midnight on 11 December.

Under proposals by the Department of Energy and Climate Change (DECC), feed-in tariffs for solar schemes would be cut by more than half from 1 April 2012. However, any project registered after 12 December 2011 would be downgraded to the lower rate from April 1, after initially receiving the current higher tariff.

Industry players expressed anger and confusion over the proposed timeline, arguing that the 12 December deadline would pre-empt the results of the consultation and effectively give installers just five weeks to complete projects seeking the higher rate.

The full consultation is scheduled to close on 23 December, 12 days after the 12 December deadline. As a result generators registering projects after the 12th of December will not know which rate they will receive until the outcome of the review in the New Year.

The government has repeatedly promised that any changes to the feed-in tariffs would not apply retrospectivly.

However, Howard Johns, of the Cut Don't Kill campaign, said the confusing timeline meant government could potentially be breaking that promise because it would downgrade returns on schemes registered after 12 December, despite the fact that they registered when the higher tariff levels were still effectively in force.

He told BusinessGreen that the campaign was now considering legal action against the government.

The government maintained the timeline would not lead to retrospective changes because those people installing projects after December 12 would be aware that the the higher rates could be lowered from April 2012.

But Jeremy Leggett, chairman of Solarcentury, said there was "no question" the dates were open to a legal challenge.

"The whole industry has contracts, staff, purchase commitments, stock - all have now been massively compromised by this short-term knee jerk. There is not even any recognition that the industry will need some time to adjust to such a change," he said.

"There is no question that a "consultation" with an end date of 23 December slashing tariffs from 12 December is wide open to legal challenge and we now expect a very serious industry challenge to be mounted."

He later said on Twitter that he had been offered help by a member of the public to help pay for a legal case against the government.

Friends of the Earth energy campaigner Donna Hume also said lawyers for the green group were investigating the legality of the consultation.

However, she declined to detail which aspects were under scrutiny, saying only that a further announcement would be made in the coming days.

Despite the mounting case for legal action, Andrew Lee, head of international sales at Sharp Solar, predicted such battles would face an uphill struggle.

Speaking to BusinessGreen, Lee warned that the government would probably have already received high quality legal advice before launching the consultation.

Despite predicting that legal battles would ensue from trade associations, he said Sharp had no plans to launch a judicial review itself.

He said Sharp hoped to diversify its offerings, to incorporate energy efficiency products as well as solar. This would allow the company to adapt to the newly proposed tariff, requiring all buildings registering after 1 April to meet certain energy efficiency standards.

However, he warned that like many in the industry, Sharp will have little time to adjust its strategy because it will need to spend the coming weeks rushing to complete pipeline projects.

He said Sharp will now urge DECC to delay the 12 December deadline in order to give companies more time to prepare.

"Any date would be better than the 12 December. We want to allow huge community projects that have already been in planning for 18 months be given the opportunity to be completed," he said.

A DECC spokeswoman told BusinessGreen that the 12 December deadline was also up for review as part of the consultation, but she argued that "urgent" changes were necessary "given the speed at which the budget is being depleted".

"We appreciate this will be difficult for companies affected, but what we want is an enduring future for the industry," she said.

"If we left things as they are the feed-in tariff budget would be eaten up entirely, full stop, and that would be even worse for employees in this sector and those working on other technologies too.

"Given the speed at which the budget is being depleted, change is urgent, but we're nevertheless providing an appropriate amount of time for consultation."