British Government To Be Sued By Solar Panel Companies

Seventeen companies involved in the solar panel industry here in the UK are to sue the British Government for £140 million in respect of the impact of cuts being made to the feed in tariff scheme.

The companies’ involved claim that it was how the alterations to the subsidies were dealt with that had a detrimental effect on their businesses with the number of solar panel installations dropping significantly and also very rapidly. The companies also claim that around six thousand of their employees were laid off. The High Court made a ruling that the cuts that were made to subsidies in 2011 were “legally flawed”.

This has been a lengthy legal battle that has seen the solar panel industry in the Supreme Court, the Court of Appeal and the High Court where, on each occasion, it has been argued with success that the government made a mistake in issuing an announcement that the feed in tariff was to be reduced before it could do so legally.

It was felt that, because the government could just make changes with so little notice and because of the level of cuts in the feed in tariff, many potential customers decided against having solar panels installed. This is perhaps borne out by the fact that prior to October 2011, when the changes were made public, in excess of 100,000 solar panel installations were carried out. However, this figure dropped by 90 per cent after the alterations.

Homeowners had been receiving 43.3p for every kWh of generated electricity prior to the cuts. The government announced in the October of 2011 that the amount would be reduced to a figure of only 21p per kWh of generated electricity. This had the effect of reducing the potential investment return from around 7 per cent to 4 per cent for homeowners. It had been intended to reduce the amounts paid in respect of the feed in tariff on solar panel installations that took place on or after 12 December 2011 but the courts stepped in feeling that the government had not given solar panel customers enough notice and insisted that the change did not become effective until 3 March 2012.

The government had argued that the reduction was necessary due to the costs of solar panels dropping meaning that homeowners were benefiting from excessive returns. The feeling of many in the solar panel industry was that, although they had no objection to the feed in tariff being reduced, the issue was the notice period of introducing the change was far too short.

We will monitor developments closely and keep you informed.