25 Jan 2012

Government will appeal on solar to save £1.5bn

The energy minister tells Channel 4 News he will appeal against a court decision not to allow the government to cut subsidies for solar panels on homes, as it will cost consumers £1.5bn.

Appeal judges on Wednesday upheld a High Court ruling that Energy Secretary Chris Huhne does not have the power to introduce the controversial “retrospective” scheme.

Despite four judges having ruled against him, Mr Huhne confirmed that he will appeal to the Supreme Court, the highest court in the land.

His decision means that the solar industry will remain on hold, with companies waiting to hear a decision on whether projects will be subsidised by the government.

Continued uncertainty as a result of legal action has already resulted in abandoned projects and job losses and the Renewable Energy Association (REA) called for an end to the “fiasco” so that “the UK solar industry can get back to business”.

But Greg Barker, the minister of state for energy and climate change, told Channel 4 News that there had been an unsustainable bubble in solar demand which rose 300 per cent between June and October, outstripping any of the projections for this programme.

The minister said the cost of the current system – which is funded through a charge on energy bills – was too high. Even though the cost would be spread over 25 years, Mr Barker said: “it’s still £1.5bn with an impact on every single family that has an electricity bill – its a very regressive way of financing this that we inherited from Labour.”

He went on to say that if the tariff rate was lower, as the government proposes, the money available could be spread more widely.

Representatives for the solar industry say the high take-up of the scheme shows the levels of public interest in solar panels which could allow the industry to become self-sufficient within three years as long as the government supports it with some “pump-priming” finance until then.

The only way we are going to get energy prices stabilising is if we invest in green infrastructure so we’re not spending more money on expensive imported fossil fuels. Howard Johns, Solar Trade Association

Howard Johns of the Solar Trade Association told Channel 4 News:”The only way we are going to get energy prices stabilising is if we invest in green infrastructure so we’re not spending more money on expensive imported fossil fuels.

“In Germany they are expecting 10 per cent of their energy to come from solar by 2020 – that’s 50 per cent of their day time electricity alone coming from solar – we could do the same here.”

The Government wants to reduce feed-in tariff subsidies (FITs) – the payments made to households and communities that generate green electricity through solar panels – on any installations completed after December 12 last year.

The Department for Energy and Climate Change (DECC) says that solar panels are getting cheaper and current subsidy levels are “too generous”.

As well as hitting consumers, funding the current subsidy will deplete future resources and other alternative energy technologies, said the department.

The High Court judge Mr Justice Mitting ruled before Christmas that it would be unlawful to implement plans to approve the cuts in April this year by referring back to the December 12 deadline.

The deadline fell 11 days before the end of a consultation period on the proposals.

Huhne told he has ‘no such power’

Lawyers for Mr Huhne appealed against his decision, arguing that the Secretary of State had the necessary power to modify the tariff rate. But today appeal judges disagreed.

In the lead judgment, Lord Justice Moses said the Energy Secretary “plainly has no such power to make a modification with such a retrospective effect”, adding that parliament had never conferred such a power, he said.

“We disagree and are seeking permission to appeal to the Supreme Court,” said Mr Huhne.

“We have already put before Parliament changes to the regulations that will bring a 21p rate into effect from April for solar PV installations from 3 March to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry.

“We want to maximise 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.”

The appeal court’s unanimous decision was hailed as a victory for environmental campaigners Friends of the Earth (FoE) and two solar companies – Solarcentury and HomeSun – which said the plans to halve subsidies were creating “huge economic uncertainty”.

They also accused Mr Huhne of “making a mockery” of the consultation process.