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UK FiT Adjustments Back On Track After Supreme Court Rejection

The UK Supreme Court has unanimously rejected the government's final appeal over the legality of its premature reductions to the existing feed-in tariff (FiT) program, which were challenged by the industry as overstepping its bounds.

Grid-connected solar installations in the UK surged to 700 megawatts in 2011 — up from just 45 megawatts (MW) in 2010 — thanks to a FiT implemented in 2010 that granted favorable pricing for renewable energy. That surge, orders of magnitude more than anyone had anticipated, threatened to overwhelm the very system of support meant to support renewable energy adoption.

So at the end of October 2011, UK ministers announced reductions to the nation's FiT — changes particularly severe to small-scale (4 kW or less) rooftop systems, whose current tariff of 43.3 pence/kilowatt hour would have been reduced to just 21 p/kWh. (Here's a list of the current and new FiT levels.) Crucially, the government also decided to pull in the changes to be active on December 12, rather than the original date of April 1, 2012. Problem was, the government and industry were already in talks over how to reduce the FiT for the next phase. The government's unilateral acceleration of those changes to mid-December spurred howls of outcry from the industry, which argued that mediating changes to lower the FiT was necessary, the government overstepped its bounds, and the short timeframe would do more harm than good.

In late December 2011 the UK High Court ruled the government's plan to retroactively implement cuts to the FiT starting Dec. 12 was unlawful. The Department of Energy and Climate Change (DECC) appealed, and was again rejected on Jan. 25 by a panel of judges; a final appeal was launched to the UK Supreme Court, which has now refused to even hear the case — and Bob's your uncle, the FiT changes are back on their original schedule.

DECC secretary Edward Davey briefly acknowledged defeat, saying the Supreme Court's refusal "draws a line under the case," but also acknowledged the need to mend fences: "We will now focus all our efforts on ensuring the future stability and cost effectiveness of solar and other microgeneration technologies for the many, not the few."

"This final step in the legal process has wasted much needed time and money," stated Solarcentury chairman Jeremy Leggett. "Renewables can only play the pivotal role necessary to deliver a new green economy if we have a stable market and investor confidence backed by lawful, predictable and carefully considered policy [...] Our hope now is that we can work together again to restore the thriving jobs-rich solar sector that has been so badly undermined by Government actions."

What Happens Now?

Basically the Supreme Court's refusal to hear the case resets the FiT discussion to the original end-date timeframe: small-scale systems completed before March 3, 2012 will get the 43.3 p/kWh rate, for example. Systems completed between March 3 and April 1 will temporarily get the better rate; anything connected after April 1 will get the reduced FiT rates.

The Solar Trade Association points out that the FiT uncertainty isn't quite over, though: "the extra money DECC will now have to commit leaves us with serious concerns about the remaining FIT budget, which remains constrained under the Levy Control Framework."

The other takeaway is a clear delineation in governmental authority; it won't be allowed to retrospectively make changes to such incentive programs in the future. Andy Atkins, executive director of advocacy group Friends of the Earth, which helped launch the protest of the government's changes, applauded the "landmark decision which will prevent Ministers causing industry chaos with similar subsidy cuts in the future." He also exhorted the government to "get on with the urgent task of restoring confidence in UK solar power [...] It recently pledged a huge increase in solar by the end of the decade, and must now spell out how it is going to do it."

Ironically, the tug of war over these UK FiT reductions likely will result in another surge of solar installations, as companies and consumers redouble efforts to complete systems that were put in a state of limbo. Perry Jackson, GM of Mitsubishi Electric's photovoltaic systems business, suggested that the UK's cumulative PV capacity of 1 gigawatt is well off the pace of its ambitious 20 GW target by 2020, "unless the Government clarifies what it is willing to do to support the industry moving forward." Nonetheless, he said, "the market will continue to grow, even at reduced tariff levels because the cost of materials and labour for systems has come down so much."

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