UK government forced to pay £132m in compensation to solar industry

A ruling by the High Court this week has favoured claims by the solar industry that policy changes towards renewable energies and incentives were in fact, illegal – costing the industry in both profits and investor confidence.

Government cuts to the feed-in-tariff (FIT) incentive has been a major blow to the UK solar industry, as investor confidence in the still expanding industry dropped.

This especially hurt smaller, domestic based solar businesses, who were significantly reliant on the incentives.

The court ruling will force the government to pay up to £132 million in compensation to businesses affected by the cuts.

This is due to the government not adhering to consultation rules, subsequently not giving the industry adequate warning of the cuts.

So far, the reductions have cost the solar industry 9,000 jobs, regardless of the clean energy source being cheaper for the consumer than standard fossil fuels.

Critics argue that the government is supplementing the solar budget in favour of the far more expensive offshore wind farm budget – which doesn’t deliver long term benefits to consumers.

Ben Cosh, managing director of TGC Renewables, said, “Today’s ruling shows that government policy on solar is unstable to the point of being illegal. The government’s ill thought out cuts to solar subsidy cost jobs and was a huge setback to Britain’s growing solar industry.

“Britain needs to back its solar industry. Solar will soon be cheaper than all forms of wind power, and before long will beat gas on price.

“However, it can only do this if it’s competing on a level playing field. Retrospective cuts to solar support will put the brakes on solar’s journey to cost competitiveness. They’re bad news for bill payers, and today’s ruling shows the government acted illegally.”

Recently, insurers have started offering investor policies that support and protect continued investment in the solar industry.

Photo source: Edmund Tse via Flickr

Further Reading:

Insurers to protect renewable energy investors as states roll back support

Government taskforce outlines plan to up community renewables investment

New breakthrough could make solar panels cheaper and safer

Renewables the solution to UK’s critical fossil fuel shortage – report

Leggett, Harder and Powell confirmed for Sustainable September energy debate