UK Government ordered to pay compensation over FiT changes
The High Court in the United Kingdom has has ruled in favour of 14 British solar and construction companies represented by energy specialist firm Prospect Law giving them victory in the critical legal issues trial of their damages claim against the Government. This follows the 2011 unlawful policy changes to the payment for generating clean electricity, the Feed-in Tariff (FIT).
The companies issued the ground breaking claim in 2012. They called on the Government to rectify the damage caused to solar PV businesses by unlawful policy changes announced by Energy Minister Greg Barker MP in October 2011. The group are seeking £132 million in compensation from the Department of Energy and Climate Change (DECC) following the decision to retrospectively introduce early cuts to the Feed-in Tariff, the payment to clean electricity generators, that devastated the fledgling industry at the time and lead to chaotic trading conditions, shattered consumer confidence and thousands of redundancies.
With 500,000 solar installations at present, the UK needs to grow the number of homes and businesses powered by solar to many millions to reach the UK's target of 20GW of solar power by 2020. Many of the projects cancelled in 2011 and 2012 were for social housing providers using solar energy as a way of providing much needed assistance to those suffering fuel poverty in the wake of huge rises to the cost of home energy.
Solar power is one of the fastest growing industries in the world and is now broadly witnessing a recovery in the UK, with a stable and healthy Feed-in Tariff secured in the original High Court battle against the cuts, firmer policy commitments, and growing consumer demand. However, the impact on clean technology companies of DECC's unlawful conduct in 2011 was catastrophic, with the handling of changes to FiTs creating a major setback to confidence, removing opportunities to invest in jobs, training, and new technology development within the crucial renewable energy sector.
The sector could have been well on its way and employing substantially more than the 16,000 workers it does today, down from 25,000 at the time of the cuts, if the Government had acted in a legal and responsible way in 2011.
The Hon. Mr Justice Coulson, the High Court Judge on the case said, "Although the entitlement to damages will ultimately depend on the facts, as a matter of general principle, the claimants have demonstrated an entitlement to damages assessed by reference to the loss of those possessions for which recovery is permissible, namely signed/concluded contracts and/or the marketable goodwill referable to such contracts."
Nick Keighley of Solarlec, one of the claimants firms, said, "The good news is that small scale solar power generation is now on the road to recovery. The Feed-in Tariff is now stable and the costs of solar PV are slowly reducing, representing increasingly better value for consumers and a very cost-effective way of generating green energy. Public support for solar remains high and the Government now want solar to play a big role in our energy mix. The fact is however that the industry was treated very badly by DECC, and their actions in 2011 damaged the growing industry and severely harmed the ability of companies such as ours in a key growth sector from investing, innovating and creating much-needed jobs as well as contributing the to UK carbon reduction commitments."
He added, "2012 and 2013 should have been years for continued growth, innovation, investment and training in the solar sector, instead DECC's conduct caused us two years of cut backs, customer confusion, part time working, stress and redundancies. Many in the industry had to let staff go in the weeks following Greg Barker's announcement. We asked for compensation to be paid to us to help us get up to speed again and to help secure the clean and affordable energy supply we need. We've just about made it through and our focus is now on investing in a much diminished workforce and planning for the future. If the Government really does support solar, it needs to compensate businesses for the losses it caused and move forward with the industry."
In May 2012 it was reported that 6,000 people had lost their jobs in the industry as a direct result of the illegal cuts and that the industry as a whole had shrunk by 25 per cent. Many believe this to be a gross underestimate of the industry's retraction, with the Government's own Environmental Audit Committee and Energy and Climate Change Committee condemning the incident as "panicky" and agreeing that such action seriously "undermines confidence".
In a policy shambles deemed unlawful and unfair by the High Court, the Court of Appeal and finally by the Supreme Court in Spring 2012, the "˜Feed-in Tariff fiasco' of 2011 caused the retraction of one of the UK's then few growing areas of employment. The claim is being led by Prospect Law who previously defeated the Government over the cuts in a Judicial Review challenge to DECC's conduct.
The £132 million claim reflects the extent of commercial damage inflicted by the Government's policy mismanagement in 2011 and Prospect Law can now pursue the quantum side of the claim on behalf of its clients.
The exact damages awarded will be decided according to the value of contracts lost as a result of the Governments illegal actions. This is to be confirmed in the coming months following a submission to the courts by Prospect Law.
