The news from the High Court in the last few minutes is bad for ministers in the energy department, with a ruling against the way in which cuts to solar subsidies were imposed. It is a victory for Friends of the Earth and two solar companies which launched the action – which are now likely to see a delay in the cuts.
Last month the government announced a halving of the feed-in tariff – which allows people to sell power back to the grid – after overwhelming demand from the public.
The move prompted a backlash from the industry because the speed with which it was imposed from the point of December 12. Solar companies also pointed out that the move was retrospective as the date was more than week before the supposed end of a consultation on the issue. These were the issues on which the court case was launched.
We may not get the full details of the High Court ruling until tomorrow but it is likely to provide relief for those companies which had millions of pounds of stock in warehouses which they were now worried they wouldn’t be able to shift.
It is unlikely to change the underlying principle that solar subsidies are being cut deeply from 43p to 21p per KwH, however. As such this may turn out to be a stay of execution for some companies.
One of the biggest issues they will face in the coming months is not the actual subsidy cut – the price of panels has fallen sharply – but new rules under which households need a certain level of insulation before they can get the tariff.
I’m told that this would exclude 86 per cent of Britain’s homes from qualifying for the scheme – unless they spend up to £14,000 on the initial insulation. There are also concerns about ministers implementing an even lower subsidy for “community” schemes.
Meanwhile Decc (the energy department) is likely to warn that the legal decision will mean even more money flooding out of the door, making subsidies even less generous in the future.
As for the politics: this is embarrassing for Decc and for the government at large – who are now open to accusations that they should have foreseen this months ago and acted sooner. Instead of being praised by the green lobby for spending nearly £1bn on household solar subsidies (the scheme has been far more successful than Labour envisaged) they are being panned for the poor handling of the changes to the system. “Hug a Husky” has never felt so distant.