DECC loses feed in tariff appeal

On Wednesday 25th January, the Court of Appeal ruled that DECC would not be granted an appeal. This means the feed-in tariff will now go back to 43.3p for <4kW systems installed until March 3, 2012.

The court judgement means all those who have installed solar since December 12, and those who intend to install systems before the March 3 cut-off point, will receive the higher feed-in tariff rates for the full 25 years, subject to a possible direct appeal to the Supreme Court.

The Department for Energy and Climate Change (DECC) has now confirmed that it will be seeking permission to appeal to the Supreme Court.  It is extremely difficult to see on what grounds DECC could do so.

It is possible that DECC is appealing in order to ensure demand for new solar installations remains low in the run up to March 3 – the new cut off date for the higher rate of feed-in tariff incentives.

It’s important to remember that once your system is installed and commissioned the FIT rate you receive for your system doesn’t change, even if the rate for new systems goes down. The FIT rate follows the Retail Price Index, benefits from a reduced income tax rate and is guaranteed by primary legislation for 25 years.

Band (kW) Current generation tariff (p/kWh) Proposed generation tariff (p/kWh)
≤4kW (new build) 37.8 21.0
≤4kW (retrofit) 43.3 21.0
>4-10kW 37.8 16.8
>10-50kW 32.9 15.2
>50-100kW 19 12.9
>100-150kW 19 12.9
>150-250kW 15 12.9
>250kW-5MW 8.5 8.5*
stand alone 8.5 8.5*

DECC is laying before Parliament some draft licence modifications which, subject to the Parliamentary process set out in the Energy Act 2008,  make provision for  the new rates to go through from April 1, 2012 with an eligibility date on or after 3 March. DECC are proposing that the rates will be the same as those proposed on 31st October – see table above. Our models show that customers will still get returns of around 7-10% each year, significantly better than other types of investment in today’s climate. Furthermore the cost of installations has dropped by between 10-15% as wholesale panel prices have dropped.

Further Information

Court of Appeal ruling:

The key paragraphs are p.52 and p.54. which state:

P52.: In those circumstances, I conclude that there was no power contained within s.41 to introduce a modification which reduced a rate fixed by reference to an installation becoming eligible prior to the modification. To do so would be to take away an existing entitlement without statutory authority.

P54: “It will be apparent that the basis upon which I reject the Secretary of State’s assertion of power to make the modification he proposes is different from that on which Mitting J relied. I do not base my decision on the basis that changes by reference to a date earlier than 1 April 2012 are not calculated to further the statutory purpose. It is unnecessary to expand on my reasons for rejecting that approach. As I have already indicated, I can well understand why the Secretary of State would seek to prevent a surge in small solar PV systems prior to the introduction of a modification which reduces the Tariff rate. I am not sure it would be open to a court to say that that is not calculated to further the statutory purpose. But that is not the question. The question is whether the Secretary of State has power to do so. In my view, he plainly has no such power.  Mitting J’s second reason was expressed as follows:-“The whole tenor of the Scheme is prospective. I cannot discern in it a clear Parliamentary intention to permit theSecretary of State to make a modification which has asignificant adverse impact on those proposing to install small-scale assistance before the date on which the modification is made and comes into effect.”

Further reading: