Four of Britain's biggest solar power companies are seeking a judicial review of the decision to remove support for large solar farms.
The Government’s renewables obligation requires energy suppliers to obtain a proportion of power from green sources and the companies involved say their business has been damaged by Energy Secretary Ed Davey's decision to bring support for large-scale solar farms under the obligation to an end next April – two years ahead of schedule.
The move comes just three weeks after the High Court cleared the way for compensation claims over the way the Department for Energy and Climate Change's (Decc) changed the rules on subsidies for domestic solar panels under the feed-in tariff scheme, which industry sources said could lead to a bill of £132m.
The latest judicial review accuses Davey of making the same mistake with a scheme which supports larger-scale solar generation on the roofs of industrial buildings or in ground-based arrays of panels.
The renewables obligation was launched in 2002 with the intention of providing confidence and certainty to the fledgling industry and claimants TGC Renewables, Solarcentury, Orta Solar Farms and Lark Energy argue that their businesses have been damaged by Davey's sudden and unilateral withdrawal of support.
Edmund Robb, a spokesman for solicitors Prospect Law, representing the companies, said: "The Government put the renewables obligation in place to offer solar businesses the certainty they need through legislation, but now it is trying to remove this certainty through the back door.
"This behaviour was found to be unlawful in the case of feed-in tariffs, and it remains unlawful now. It is surprising that Decc has not learnt its lesson."
The claimants say Decc's actions could cost large numbers of jobs and business worth hundreds of millions of pounds, at a time when solar is rapidly reducing in cost and "tantalisingly close" to producing energy at a lower price than gas and becoming subsidy-free by the end of the decade.
They also allege that the consultation conducted before Davey's decision was a "sham".
Ben Cosh, managing director of TGC Renewables, said: "The pace of British solar innovation means costs are plummeting, solar is on the verge of becoming the cheapest renewable energy source and there's a real chance it can give gas a run for its money.
"Solar is tantalisingly close to becoming subsidy-free, meaning cheaper bills for consumers, and we want to achieve this goal as quickly as possible. All we need from Ed Davey is stable and lawful policy, but instead he has yet again pulled the rug from under the industry's feet."
The solar firms are part of an 800MW supply chain worth over £800m and employing 16,000 people in the UK, with enough projects in progress to provide power to over 200,000 homes, said industry sources.
A spokesman said that the cost of the technology has plummeted by 65 per cent in just the last four years, making it one third cheaper than offshore wind and close to out-competing onshore wind.
This is the third time in as many years that legal action has been brought over the Decc’s solar policies.
A Decc spokesman said: "We have managed to put ourselves among the world leaders on solar and our solar strategy will help us stay there. There is massive potential to turn our large buildings into power stations and we must seize the opportunity this offers to boost our economy.
"We are not cutting off support for large-scale solar. It will have to compete on price with other established renewable technologies delivering consumers better value for money."