Less than a year after the introduction of the feed-in tariff support regime for smallscale renewables, the Government has announced that it will reduce the tariffs by up to 72%. Any project above 50kW which has not achieved eligibility status by 1 August 2011 will be subject to the reduced tariffs.
The feed-in tariffs were introduced to stimulate the uptake of renewable energy. However, the scheme has been significantly more successful than predicted, prompting an announcement in last year’s spending review that savings of £40m from the cost of feed-in tariffs would need to be made in the 2014/2015 financial year. The cuts have therefore been presented as a necessary step to safeguard the available funds for domestic solar projects and to encourage the uptake of renewable electricity generation from anaerobic digestion.
The Government’s announcement follows a fast track review of the scheme by the Department of Energy and Climate Change. However, the move appears to be in direct conflict with the UK’s statutory and international commitments for increasing electricity generation from renewables. Crucially, many solar power projects will have been modelled on the revenue streams expected from the existing feed-in tariffs and could now be in jeopardy. A number of leading solar power companies are therefore seeking judicial review of the Secretary of State’s decision to conduct a fast-track review of the feed-in tariff regime this year. The challenge relies on the fact that the Government made clear at the outset of the scheme that it would not review the tariffs until 2012 and that any changes from that review would not be implemented until April 2013. It could prove to be an uphill battle for those solar companies bringing the challenge, but the outcome of the legal action could help shape the future of solar power projects across the UK.