14 solar companies win £132m damages against DECC decision to cut feed-in-tariff subsidy

house 1By our Legal Correspondent

Fourteen solar power and construction companies have won a case at the High Court in London after accusing the UK Government of “unlawfully” cutting feed-in tariff (FiT) subsidies.

The group is now seeking £132 million in damages, although the amount of compensation actually awarded will be decided at a later date.

The organisations claiming damages include:  Freetricity Plc, Ecovision, Solar Power PV Ltd, Solarlec, Crystal Windows and Doors, Breyer Group Plc, E-tricity, Foz Electrical, Viscount Solar Ltd, New Energy Solutions, Green Home Company, Evo Energy, Monitor My Solar, and Cleaner Air Solutions.

The average size of claim is £6 million with individual claims ranging in size from £250,000 to tens of millions of pounds.

The companies said that the 2011 changes had “devastated the fledgling industry at the time and lead to chaotic trading conditions, shattered consumer confidence and thousands of redundancies”.

Mr Justice Coulson, the High Court Judge on the case, said: “Although the entitlement to damages will ultimately depend on the facts, as a matter of general principle, the claimants have demonstrated an entitlement to damages assessed by reference to the loss of those possessions for which recovery is permissible, namely signed/concluded contracts and/or the marketable goodwill referable to such contracts.”

Nick Keighley of Solarlec, one of the companies which brought the legal action, said: “The good news is that small scale solar power generation is now on the road to recovery.

“The FiT is now stable and the costs of solar PV are slowly reducing, representing increasingly better value for consumers and a very cost-effective way of generating green energy.

“Public support for solar remains high and the UK Government now wants solar to play a big role in our energy mix.”

He added: “The fact is however that the industry was treated very badly by DECC, and its actions in 2011 damaged the growing industry and severely harmed the ability of companies such as ours in a key growth sector from investing, innovating and creating much-needed jobs as well as contributing the to UK carbon reduction commitments.”

With 500,000 solar installations at present, the UK needs to grow the number of homes and businesses powered by solar to many millions to reach the UK’s target of 20GW of solar power by 2020.  Many of the projects cancelled in 2011 and 2012 were for social housing providers using solar energy as a way of providing much needed assistance to those suffering fuel poverty in the wake of huge rises to the cost of home energy.

The 2008 Energy Act and the Feed-in Tariff provide a set of rules for delivering the UK’s clean energy future via small scale renewable energy generation. Prospect Law’s High Court challenge in 2011-12 established that the way in which DECC attempted to apply retrospective cuts to FiTs rates was unlawful and ignored the Government’s own policy framework.

By casting aside the rules under which the solar industry operated, the Government caused major financial losses to solar PV firms, and materially harmed the confidence of both consumers and the industry. Prospect Law’s damages claim against DECC has been upheld on all 4 of the key legal issues at stake:

  • First, the judge has found that contracts to deliver solar PV installations for FiTs payments were “possessions”;
  • Secondly, that DECC’s attempted retrospective changes to FiTs in October 2011 amounted to an “unlawful interference” with these possessions;
  • Thirdly, that this interference was not justified; and
  • Fourthly, that the solar PV firms are entitled to “just satisfaction” in order to compensate them for their losses. The judge has said that DECC must now face a full claim for the quantum of the losses that were suffered.

A spokesman for Propsect Law, the solar power companies’ solicitors, added: “Solar power is one of the fastest growing industries in the world and is now broadly witnessing a recovery in the UK, with a stable and healthy Feed-in Tariff secured in the original High Court battle against the cuts, firmer policy commitments, and growing consumer demand.

“However, the impact on clean technology companies of DECC’s unlawful conduct in 2011 was catastrophic, with the handling of changes to FiTs creating a major setback to confidence, removing opportunities to invest in jobs, training, and new technology development within the crucial renewable energy sector.

​“​The sector could have been well on its way and employing substantially more than the 16,000 workers it does today – which is down from 25,000 at the time of the cuts – if the Government had acted in a legal and responsible way in 2011.”

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