Solar firms renew court battle against Government subsidy cuts
Two of the UK's largest solar companies will take on the Government in court today (2 February) over the early closure of the Renewables Obligation (RO) to large-scale solar projects in early 2014.
According to the argument put forward by SolarCentury and Lark Energy, the Government cut subsidies in a “sudden retrospective nature”, introducing a level of political risk “for which no investor or company can adequately prepare”.
The Government unveiled its plans to prematurely end the RO for large-scale projects through a consultation launched in May 2014.
When the closure of the scheme was later confirmed, it was ruled that solar companies that had not met certain criteria – such as having planning permission – by the time that consultation started would not qualify for the remaining subsidy, even though this was to run until April 2015.
The solar companies argue that having this ‘grace period’ start when the consultation was launched – rather than after the legislation is officially passed, for example – counts as retrospective legislative change, which they claim is unfair.
“Retrospective legislative change fundamentally undermines confidence in the renewables industry, costs companies money, threatens jobs and makes medium-term business planning impossible,” said the two companies in a statement this week.
The Government has used a similar model to push through other cuts to the RO scheme and cuts to the Feed-in Tariff for small-scale renewables. As a result, the outcome of the current hearing could have major implications for the way in which the Government approaches future renewable energy support mechanism decision.
Todays’ court battle is the second clash between the solar companies and the Government after the High Court ruled in November 2014 that the Government’s actions were reasonable, since it was trying to limit spending under the Levy Control Framework (LCF).
The appellants’ main argument in the appeal is that the LCF clearly states that investor confidence is paramount to the operating of renewables subsidy schemes and that retrospective changes will not be made to such schemes.
Solarcentury head of external affairs Seb Berry said: “Up until early 2014, there had been no uncertainty about the RO closure date, with the Government clearly stating that the RO would remain open for accreditation until 2017.
“The Government was crystal clear about what it would do. All of that changed on 13 May 2014. The High Court accepted that the Government had acted retrospectively, but that the constraints of the LCF made this an acceptable risk for investors and lawful policy.
“But without investor and stakeholder confidence in policy, risky projects will cost a lot more or not be built at all. Many people in the renewables sector and not just in the solar industry will be watching the outcome of this appeal with great interest.”