The Supreme Court was right to block the government acting retrospectively, but now former adverseries must work together for the good of the industry
At last, it is over. After four months and three court cases, the Supreme Court has finally confirmed what everyone except the Department of Energy and Climate Change (DECC) always suspected, that the government acted unlawfully when it tried to impose cuts to solar incentives before the end of the consultation proposing those cuts.
Serious questions will now be asked about the wisdom of ministers' willingness to impose rapid cuts that were always going to be vulnerable to a court challenge, the deeply flawed legal advice the department received, and the cynical tactic of using repeated appeals to create uncertainty in the market and slow down deployments.
The answers to these questions will be argued over for the next few weeks, but the only issue that really matters is where the government and the solar industry goes from here.
There have been too many raised voices and forced smiles from all sides over the past few months and it is now time to bury the hatchet, draw a line, move on, and all those other clichés.
The Supreme Court's ruling is hugely important for the entire renewables industry as it stops the government setting a precedent that would have made rushed, unexpected, and retrospective changes to subsidy schemes acceptable. No one can develop a business or plan investments under such circumstances and it is important that the court has confirmed the government must give due notice of any changes, just as it is important that ministers have realised this themselves and are proposing a more predictable regime for cutting feed-in tariff incentives in the future. The companies and NGOs that stuck their neck out and pursued legal action deserve the wider industry's thanks.
But the ruling also puts further pressure on the feed-in tariff scheme's budget. Projections that I have seen suggest the cost of the defeat to the scheme is much lower than DECC originally claimed and will add a fraction of a per cent to energy bills. But Climate Change Minister Greg Barker was right when he said that the surge in installations pre-Christmas (admittedly caused by DECC's cuts announcement) meant the budget was breached for this year, just as he was right to say every installation at the 43p/kWh rate means two sites will not be able to get the 21p/kWh rate. Let there be no doubt the government was right to cut incentives that had become excessive, the problem was with the handling of the cuts.
There is a real danger that the government will react to this reverse by forcing through further deep cuts in incentives in the summer – proposals which according to industry insiders will lead to a contraction in the market this year and are already resulting in redundancies at many solar firms. If the industry is to continue to grow and the UK is to have any hope of developing a low carbon decentralised energy system any cuts need to be very carefully handled and some of the excessive restrictions the government is proposing for the solar sector need to be lifted.
That is the short term challenge. In the medium term there now needs to be a much tighter collaboration between the government and the solar industry and a clear long term plan for nurturing its development as the cost of solar technologies continues to fall.
Through its cack-handed handling of the first wave of feed-in tariff cuts the government has been given an explicit demonstration of how popular solar technologies are, how fast costs are falling, and how quickly solar technologies can be deployed. Regardless of what critics say about the high cost of the feed-in tariff scheme, the solar industry has increasingly convincing evidence that it can deliver cost competitive technology without subsidy before the end of the decade. At relatively low cost the government can nurture the sector through the next few years up to the point where it becomes a genuinely mainstream low carbon technology, but only if it sees solar as a strategic part of the energy mix and finds some additional funding to address the continuing budget constraints.
It is understandable for the solar industry to celebrate a successful conclusion to this sorry saga, but it would be advised to go easy on the champagne and definitely avoid anything that looks like crowing.
In the next few months solar firms are going to have to sit down with the government and make the case for the continued development of an industry that has the potential to transform the way we generate energy. They will only be able to make that case convincingly if both the victor and the vanquished agree to shake hands and move on. For the sake of all businesses interested in cutting their emissions and generating their own energy, let's hope that today's ruling represents the last time the solar industry has to make its case in court.
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