UK: Solar companies lose High Court battle

Four British solar companies have seen their attempt to sue the government over its controversial decision to close the Renewable Obligation (RO) scheme for solar two years early dismissed by the High Court.

Mr. Justice Green has today rejected all grounds for a judicial review of the Department of Energy and Climate Change’s (DECC) decision put forward by Solarcentury, Lark Energy, TCG Renewables and Orta Farms despite agreeing that the premature withdrawal of the RO will have a retrospectively damaging impact on the solar industry.

In May, DECC announced that the RO scheme will be withdrawn for solar installations above 5 MW in size from April 1, 2015 – two years before previously pledged. The four companies involved in the legal action claimed that they had received assurances from DECC that the RO would be eligible until 2017 "in recognition of the acknowledged need for [solar] operators to have a secure and stable legal and investment environment in which to plan".

However, in throwing out the claim, the judge said: "They [the four solar companies] submit that the bringing forward of the closure date pulls the rug from under their feet and thwarts their rights," adding. "No assurances were given at any point that the scheme would be maintained until 2017."

While the judge agreed that the decision by DECC to bring the RO withdrawal date forward could have repercussions, and that the government issued "clear and repeated representations" that this would not happen, large-scale solar developments in the U.K. were always exposed to an overriding risk that "if up-take of the RO scheme was such that DECC’s spending limits were exceeded, then the scheme would have to be modified or curtailed in some way in order to bring expenditure back into line.”

The judge’s words echoed DECC’s own rationale for shortening the RO’s time span, which centered on solar’s surprisingly swift growth eating up too much of the Levy Control Framework budget. As it so happened, such a scenario came to pass – prompting the judge to uphold the notion that the Energy Secretary Ed Davey "was entitled on the facts of the case to frustrate that expectation."

Some solar developments are now likely to "fall on the wrong side of the line" added Justice Green, who stressed that this seemingly arbitrary decision merely reflects the fact that resources are limited.

"In drawing a line where it has been drawn, and not at the de minimis threshold, resources will be freed up to the Secretary of State to allocate elsewhere. In my judgment the grace periods are fair and the challenge upon the basis of retrospection fails."

A spokesperson representing the four solar companies issued the following statement in response to today’s ruling: "The decision to launch the JR was taken immediately following the 13 May announcement, which as it originally stood closed ROs for solar in an unlawful way.

"We are pleased that as a result of our court action, DECC moved significantly during the consultation period and the proposed grace period criteria set out in the May consultation were relaxed in the consultation response on the 2nd October.

"In court the judge agreed that DECC’s action had a retrospective impact, but ruled that it was fair for DECC to set a qualification deadline identical to the very first day of the consultation period, causing wasted capex for some developers.

"This ruling may have serious implications for the wider energy industry. We are considering whether to seek leave to appeal and will make a further statement in due course."