LGA joins outcry over solar subsidy cuts as industry takes legal action

The controversy over the government’s proposed cuts to solar electricity subsidies continued to grow this week, with town hall chiefs warning that councils have had to “pull the plug” on thousands of panel installations and solar companies revealing plans to bring a legal challenge.

The Department of Environment & Climate Change launched a consultation on 31 October on proposals to cut subsidies for Feed-in-Tariff (FIT) rates by more than 50%. The reductions for owners of multiple installations – such as local authorities and housing associations – are even greater.

The lower rates will be imposed on installations completed after 12 December this year, despite the government originally saying that payments would remain unchanged until April 2012.

The Local Government Association has written to Energy Secretary Chris Huhne urging him to delay the proposed cut until the end of the financial year. It said this would allow councils a realistic amount of time to get in place installations that have been commissioned on the promise of the current incentives.

In the letter, the LGA also called on the minister to:

• “Protect schemes beneficial to the community from cuts to the subsidy
• Ensure that social housing landlords are not penalised by an additional reduction in tariff for owners of multiple buildings with solar panels
• Siphon off a small percentage of the profits made by energy companies to provide more money for community solar panel schemes.”

The Association warned that the costs incurred by authorities across the country as a result of the early introduction of the cuts “could run into hundreds of millions of pounds”.

Cllr David Parsons, chairman of the LGA Environment Board, said it was “unrealistic and unacceptable” to expect councils and the solar industry to deliver projects and have them registered with Ofgem by 12 December.

He said: “It's absolutely imperative that we make sure our residents' energy bills are safeguarded from runaway schemes which do not provide value for money, but what is happening here is that local councils, and local people, are paying the price for this government department's mistakes.

"Councils have been spearheading the roll out of solar panels for residents because many families on lower incomes couldn't afford to do it themselves. Councils weren't making a profit out of this, but were doing it to help the environment and help people make a difference and bring down their electricity bills.”

Cllr Parsons said implementing the cuts before the consultation had finished was going to leave local authorities “stuck between a rock and a hard place”. Solar panel schemes that were commissioned based on the promise of the previous rate of subsidy will be jeopardised with many councils unable to afford to meet the shortfall, he added.

A group of solar companies – including Solarcentury – have meanwhile begun legal action against DECC.

The group said they would be seeking an interim injunction to stop DECC from using 12 December as the cut-off date for existing FITs on the basis that it was “illegal, irrational and unreasonable”.

The companies said they wanted to stop cuts to FITs being made “until DECC has actually completed a proper, legal review and followed the correct processes”.

The group claimed that many large contracts had been cancelled already, including major projects for housing associations and local authorities that had “no hope of completion by 12 December”.

It said: “We expected a proper and fair consultation on the review of FITs. We expected to have the time to plan for the next stage of the development of the market. We were all expecting a new tariff from April 2012 or at worst at the very end of a proper ‘fast-track’ process.

“Instead we get a ready-made decision which seriously harms the solar industry and everyone in it and gives us less than six weeks to save the businesses we have built up over multiple years.”

The group’s announcement comes just days after Friends of the Earth also threatened the government with legal proceedings.

The government has insisted that the cuts in subsidies are essential to protect the wider FITs schemes and to avoid boom and bust in the solar industry.

Philip Hoult