Industry suffers fall-out from proposal

THE last three months have been turbulent for those in the solar industry, following the announcement by the Government of proposals to significantly reduce the feed in tariffs (FIT) for solar PV panels installed after December 12 last year.

THE last three months have been turbulent for those in the solar industry, following the announcement by the Government of proposals to significantly reduce the feed in tariffs (FIT) for solar PV panels installed after December 12 last year.

The proposed early cut-off date, which was published as part of the phase 1 consultation on the comprehensive review of the feed-in tariff scheme, was also 11 days earlier than the end of the consultation period, suggesting the date was a foregone conclusion.

This led to a number of large-scale projects, including social housing and community projects, being cancelled as business cases no longer stacked up with the reduced rates and large projects couldn't be implemented in the six-week window left following the announcement of the proposals.

Despite this, many householders and businesses with smaller or more advanced projects were still able to act before the cut-off date and there was a rush up and down the country to order and install equipment to secure the existing rates. However now the cut-off date has passed, the rate of installations has reduced so dramatically that the solar market has almost stalled.

Figure from the Department of Energy and Climate Change (DECC) suggested that there were nearly 30,000 solar PV systems installed in the week leading up to December 12. In contrast, there were just over 800 installed in the following week.

This massive drop in demand has been caused by the uncertainty over what FIT rates new installations will receive and the uncertainty will continue until the Government announces the response to the consultation and its final proposals, which is not expected until at least the end of January.

However it seems the situation may become clearer later this week when the Court of Appeal is expected to consider the legitimacy of the Government's proposals. This follows a ruling by the High Court on December 21 in judicial review proceedings brought by Friends of the Earth and two solar companies, Solar Century and Homesun, that the early cut off date was unlawful.

Despite the refusal by the High Court to grant the Government leave to appeal and calls from the industry to accept the decision to reinstate some certainty in the solar market, the Government last week lodged a last minute application seeking leave to appeal in the Court of Appeal. The hearing is scheduled for Friday and if permission to appeal is granted, it is expected that the Court will hear the Government's appeal on the same day.

It is clear that the Government has not handled the feed-in tariff review well. This was also the conclusion of the energy and climate change committee and the environmental audit committee who together published a report on December 23 making a number of urgent recommendations which it is hoped will be taken into account in both the Government's response to the Phase 1 Consultation and its Phase 2 proposals.

In the meantime all eyes are on the Court of Appeal to see if the outcome of the Government's appeal will provide any earlier certainty, which is crucial at a time when many solar businesses, particularly small installation companies and fledgling businesses, are struggling to pay their workforces and keep their businesses going.

:: Jackie Gray is a director in the energy practice at Dickinson Dees

 

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