The government will go head-to-head with two UK solar firms in the Appeal Court today, battling claims it acted unlawfully in its 2014 decision to close the Renewables Obligation (RO) scheme - the main subsidy scheme for large-scale solar and wind projects - two years' early.
The government took the decision to close the RO for big projects two years' early in May 2014, claiming the early change to the scheme was needed in order to prevent large solar farms eating up too much of the £7.6bn Levy Control Framework (LCF) budget that has been earmarked to support a wide range of clean energy technologies through to 2021.
However, two UK solar firms, Lark Energy and Solarcentury, say the decision is unlawful because it was applied retrospectively. The first consultation on RO closure was launched in May 2014 - and when the policy was confirmed it was announced it would be backdated to the date of that first consultation period.
This meant solar firms that did not meet certain criteria - such as having planning permission for projects - would not be able to qualify for accreditation before the scheme closed for good in April 2015.
The two firms argue the backdating tactic is designed to have "a very immediate and damaging impact on the market" by introducing political risk into the investment sector.
Jonathan Selwyn, managing director of Lark Energy, said the move to set a grace period deadline to coincide with the first day of the consultation period was a "calculated, cynical ploy" that damaged firms that had developed business plans based on their ability to access the scheme. "It's designed to create the maximum disruption in the market and with immediate effect, which is why we pursued the case in the first place," he said in a statement.
Solarcentury and Lark were both part of a case brought before the High Court in collaboration with two more firms, Orta Solar Farms and TGC Renewables, in late 2014. The four companies lost the case, with the High Court ruling that ministers were justified in their setting a retrospective grace period because of a projected overspend within the LCF.
However, since then the two firms say the government has "singularly failed to provide any evidence that early closure of the large-scale RO was essential for keeping within the overall LCF spending envelope".
Seb Berry, Solarcentury's head of public affairs, said many people in the sector will be monitoring the outcome of the case with great interest, as a win for the solar firms could mean the use of backdated grace periods for future subsidy changes would be curtailed.
Over the past six months it is estimated that 6,500 jobs could have been lost in the UK solar industry as a result of government cuts to subsidy schemes, according to a December survey from the Solar Trade Association.
DECC were still considering a response at the time of publishing
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