Jackie Gray is a director in the Energy Practice at Dickinson Dees law firm. Image contributed.
Last week the Court of Appeal ruled that the Government acted unlawfully when it proposed to reduce the feed in tariff (FIT) rates from April 1 2012 for PV systems installed after December 12 2011. Whilst this initially looked like a victory for the UK solar industry, the Government is not going to back down and has since announced its intention to appeal the ruling to the Supreme Court. Jackie Gray, director at Dickinson Dees law firm, explores how this will affect the SME community.
In response to the Phase 1 consultation on solar PV, the Government has now made changes to the FIT rules which will introduce lower FIT rates from April 1 2012 for all PV systems with an eligibility date on or after March 3 2012. However, until the Supreme Court rules on the point, no one knows what FIT rates will apply to PV systems installed between December 12 and March 3. This is because the Department of Energy and Climate Change (DECC) is still reserving the right to lower the FIT rates in the future using the December 12 date if its appeal is successful.
We are still however waiting to hear the Government’s response to the rest of its Phase 1 proposals on solar PV, including whether eligibility will be linked to the energy efficiency of a property, and if an even lower FIT rate for aggregated PV schemes will be introduced. This means that in addition to uncertainty over the FIT rates now, businesses, investors and homeowners can’t even plan beyond April, and many jobs, particularly in small businesses, continue to be under threat.
What this means for SMEs?
Many SMEs have been in a state of limbo now for a year as Phase 2 of the consultation, which may also propose changes to the FIT scheme affecting other technologies, is now also well overdue. The continued delays and uncertainty are also making it difficult to plan wind, hydro and anaerobic digestion projects. These technologies generally have longer lead in times and therefore proposals to reduce other FIT rates could impact on their financial viability.
The latest GDP figures indicate that the economy is going backwards, and many are concerned that we are heading into a second recession. The Government’s decision to press ahead with the appeal only serves to jeopardise businesses in a sector with growth potential and therefore could make matters worse. The “greenest Government yet” has promised to help SMEs by making it easier to get finance. It also claims to be facilitating growth by reducing regulations and opening up Government procurement opportunities. However in order to plan and grow their businesses, SMEs and investors also need a Government with sustainable policies. DECC’s poor track record on the FIT scheme and the prolonged uncertainty its actions have created have been immensely damaging.
Consequences for the future of green energy
If in due course the Supreme Court upholds the Government’s appeal, the decision could have catastrophic consequences for the future of green energy, investor confidence and many thousands of jobs. Rather than wasting more time and thousands of pounds of taxpayer’s money fighting the judgement, the Government should be looking at introducing more considered green initiatives which provide SMEs with the opportunity to contribute to the growth of the UK economy at a time when the country most needs it.
Jackie Gray is a director at Dickinson Dees. She is part of the energy team, and an expert in Solar PV and renewables. She specialises in public sector projects as well as dealing with Local Government and Local Authorities. She is a recognised expert in data protection and freedom of information issues, particularly the Environmental Information Regulations Act 2004 advising public sector clients and private sector clients working in the public sector.