Subsidies for solar farms of 5MW or more will end in 2015 after a judicial review of the decision was rejected

Attempt to overturn solar subsidy cut fails

An attempt to overturn the government’s decision to end a subsidy program for solar power projects early has been rejected by judges.

The High Court today refused an application for a judicial review of the Department of Energy and Climate Change’s (Decc) decision to end subsidies under the renewables obligation scheme for solar farms with a generating capacity of more than 5MW by 2015 instead of 2017, as previously envisaged.

The scheme is designed to incentivise energy suppliers to source increasing proportions of their power from renewable sources. Solar power firms Solarcentury, Orta Solar, TGC Renewables and Lark Energy said the move to scrap the subsidies early was unlawful, however, and could result in a large number of job cuts and cost the solar industry hundreds of millions of pounds.

But in its ruling the court dismissed the application, saying no assurances were given that the scheme would be maintained until 2017 and it was clear it was subject to "the overriding risk that if up-take of the scheme was such that Decc's spending limits were exceeded then the scheme would have to be modified or curtailed in some way in order to bring expenditure back into line".

The changes were proposed by Energy Secretary Ed Davey in May to prevent costs from soaring due to unforeseen growth in the solar power sector, which led to concerns that it might divert much-needed cash from other low-carbon technologies.

In its decision the court accepted that "clear and repeated representations" were made by the government to the effect that the scheme would remain in place, but that even if a legitimate expectation had arisen the Energy Secretary "was entitled on the facts of the case to frustrate that expectation".

Solar projects are still able to apply for the new contracts-for-difference scheme starting next April, which sets a minimum electricity price for renewable energy generation for 15 years and is designed to eventually replace the renewables obligation.

But the companies said the government needed to maintain a stable policy on the issue to properly support a sector that is close to becoming subsidy free.

"We are pleased that as a result of our court action, the Decc moved significantly during the consultation period and the proposed grace period criteria set out in the May consultation were relaxed in the consultation response on 2 October,” a spokesman for the four companies said in reaction to today's decision.

"This ruling may have serious implications for the wider energy industry. We are considering whether to seek leave to appeal and will make a further statement in due course."

The news is a further blow to the industry after Environment Secretary Liz Truss announced last month that the government would stop administering a £2m subsidy program that makes up part of the EU’s Common Agriculture Policy, which allowed farmers to claim up to £100 an acre for covering their land with solar panels.

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