Today’s Court of Appeal Judgement on the Premature Closure of the Large-scale Solar Renewables Obligation
Today’s Court of Appeal Judgement on the Premature Closure of the Large-scale Solar Renewables Obligation.
Today’s judgement in favour of DECC is extremely disappointing news for all those who want the UK to be a magnet for investment in large-scale renewable projects.
In short, the Court has decided that the Government can lawfully apply the overall Levy Control Framework (LCF) funding cap in selective ways to cut off support to individual technologies, regardless of all other policy promises and commitments. Furthermore, the Court has confirmed that Government can do that lawfully whenever it chooses, regardless of the negative impact of such shock decisions on investment in developing projects and regardless of the lack of Government transparency in the selective way it applies the LCF cap.
This very narrow reading of the LCF policy means that in effect, it trumps all other policy decisions and Ministerial statements and indeed that was the blunt DECC message throughout the High and Appeal Courts process. Taken together with the full range of damaging political decisions made since last year’s election, this ruling will do nothing to help restore confidence in the UK as a renewables market underpinned by stable and predictable policy.
At a time when other more expensive non-solar parts of the renewable energy industry are looking to the Government for long-term commitments to a second LCF beyond 2020, we have to ask why would anyone trust this or a future Government to deliver on such promises made today?
This ruling, which confirmed the legality of setting a grace period qualification deadline equivalent to the first day of a consultation period, will set off alarm bells in renewable industry Boards all over the country and beyond. By definition, setting a grace period deadline equivalent to the first day of a consultation had been an unknown and unknowable risk, but it is now a risk that will have to be factored in to the costs of all future major renewables investment decisions in the UK.
While large solar has fallen out of favour and borne the brunt of recent policy u-turns, no-one can predict how the government will approach other more expensive technologies in future years. The most recent EY quarterly Renewable Energy Country Attractiveness Index (RECAI) argued that a lack of regulatory clarity” from central Government has already had a damaging impact. EY argued that the UK has now joined countries such as Saudi Arabia and Poland in the “must try harder” category and that 2016 is “make or break year for these markets.”
Today’s Court decision will do nothing to calm investor nerves, nor deal with the policy uncertainties highlighted by EY and other independent commentators in recent months. Indeed, it will do the reverse.