After months of uncertainty and speculation throughout the renewables industry it was announced on Wednesday 25 January that the Government had lost its appeal against the High Court's original decision in December 2011 which found that the proposed cut of the Feed-in Tariff proposed was ‘unlawful’.
The Government’s original intention was to cut the Feed-in Tariff rate for every solar project installed after 12 December 2011 by approximately 50%. However, Friends of the Earth and two solar companies claimed this cut in subsidy was unlawful and the consultation process had not been conducted in the appropriate way. After the Government lost the appeal against this ruling it made a further announcement just hours later to take the matter to the Supreme Court.
If the Government loses this further appeal any systems installed and registered before 3 March 2012 will receive the higher feed-in tariff rate of 43.3p/kWh for domestic systems and 32.9p/kWh for farm-scale installations. If it wins the reduced rate will apply to any scheme installed after the original 12 December date.
Although there has been an initial rush for landowners to try and get systems installed before the March deadline it is anticipated that most installers will not be able to guarantee this date unless the scheme was already in the pipeline. With the added risk of the rate being reduced from the original date there still is a considerable amount of uncertainty within the industry.
However, as panel prices have reduced significantly over the last six months an installation at the lower Feed-in Tariff rate still looks relatively attractive, especially to farmers and commercial users with high energy consumption on site. With some schemes still showing an initial return of nearly 10% we would recommend that clients review opportunities for harnessing solar energy against a background of reduced panel costs.
If you have a scheme which you would like to discuss with our renewables team please do not hesitate to contact either Andrew Barr or Hayley Chandler at our Bedford office for more information.