Summary and implications
During February 2011 the Government announced the first review of the Feed-in Tariffs (FITs) scheme. The review was originally intended for 2012 but was brought forward 12 months due to government concerns about the impact of (what the Government considers) large-scale solar photovoltaic projects over 50 kW.
At the time, the announcement caused widespread doubt and hesitation in the market when, according to investors, funding was critical. Many projects were consequently suspended, banks were reluctant to lend and a group of investors have since launched a judicial review of the decision to review FITs.
Climate Change and Energy Update, March 2011
For a detailed look at the announcement of the FITs review and industry response, click here
Judicial Review of FITs Review
On 18 April 2011, a group of solar firms, along with a number of individuals, filed a claim in the High Court seeking a judicial review against the Energy and Climate Change Secretary, Chris Huhne, and his decision to launch a fast-track review of the FITs incentive scheme available for larger solar installations.
The legal challenge was launched by:
- Alectron Investments Ltd;
- Element Power Ltd;
- Juwi Renewable Energies Ltd;
- Lark Energy Ltd;
- Low Carbon Solar UK Ltd;
- MO3 Power Ltd;
- Donald Anderson;
- Guy Anderson;
- Kate Kenyon; and
- The Green Company (Europe) Ltd.
The move has been widely anticipated ever since the Government launched the surprise review on 7 February. The legal action accuses the Department of Energy and Climate Change (DECC) of reneging on promises not to cut FITs until 2012 and failing to follow its previously stated processes for reviewing the scheme. Specifically, the application for a judicial review centres on the Government’s handling of the fast-track review, arguing:
- That indications from DECC suggested the first review of FITs would not take place until 2012 with no changes being implemented until April 2013 at the earliest;
- Any review was originally intended to be carried out over a 12-month period with any changes to tariffs implemented from 2012. The Government is now planning to impose (any) changes from the start of August 2011;
- The Government failed to announce a review threshold, despite assertions that an early review would only be triggered after surpassing the threshold; and
- The Government has failed to provide adequate evidence that there is an “excessive deployment” of large-scale solar projects that undermine the effectiveness of FITs.
Mark Shorrock, the Chief Executive of Low Carbon Solar UK, explained the decision to apply for a judicial review: “In pulling back on a commitment to support solar energy, the Government will cause the abandonment of hundreds of community scale schemes. The costs of not getting this right now include the creation of new jobs, a diversified income for farmers and landowners, reduced energy costs for businesses and the provision of more secure and reliable energy for the UK.”
The Renewable Energy Association believes the Government’s proposed reduction to FITs could come in at 70 per cent and cause a severe disruption to the long-term growth of the sector: “No new projects will start if this proposal becomes law. This industry has been strangled at birth. The huge number of envisaged new jobs will disappear.” In response to the application for judicial review, DECC said: “We have been served with a judicial review in relation to the feed-in tariff review into large-scale solar, which we will consider. We support sustained growth in the solar industry and have proposed measures for consultation that will protect the FITs scheme for homes, small businesses and communities.”