Ministers say that if they lose the court case they will fund the higher rate payments for a further three months
About 3,700 homes and businesses could claim a higher rate of subsidies for solar panels after the government on Thursday offered a compromise deal in the row over cuts to the scheme.
Although there is a continuing legal battle over the announcement last year that the Department for Energy and Climate Change (Decc) would cut solar feed-in tariff payments by half from 12 December, ministers said that if they lose the legal case they will fund the higher rate payments for any panels installed by 3 March.
A high court judge ruled in December that the cuts were "legally flawed", following a challenge by solar companies and green groups, which feared that the sudden decision would cause a plunge in demand and severely damage the industry. After a massive rush to fit solar panels following the government's announcement ? with about 80,000 installations in the six weeks to the original December 12 deadline ? demand has plummeted, with DECC expecting only 3,700 more from that date until March 3.
If the government loses its court appeal, millions of pounds will be added to the feed-in tariff's budget, which is already running over for this financial year.
Climate minister Greg Barker told the House of Commons, however, that if the government wins the legal challenge, it would stop paying higher subsidies for anything installed after 12 December last year.
In a repetition of his earlier arguments for cutting the subsidy, Barker added: "It is very important that we reserve this as an option because these 43p [higher rate] payments will take a disproportionate share of the budget available for small-scale low-carbon technologies. We want instead to maximise the number of installations that are possible within the available budget rather than use available subsidy to pay a higher tariff to a smaller number of installations."
The latest announcement that the government would fund the higher tariffs for installations up until 3 March if it loses the case was welcomed by groups which were angered by the October decision. The Renewable Energy Association said the "plan B" offered more certainty to consumers and businesses who made and installed the equipment.
Andy Atkins, the executive director of Friends of the Earth ? one of the three parties to take legal action against the government over the cuts ? said: "At last the government is taking steps to sort out some of the uncertainty that's crippling a thriving UK industry ? planned cuts will at last allow solar firms to start planning for the future. Solar payments should be cut in line with falling costs ? but by trying to rush through payment before the consultation closed ministers created a shambolic mess that threatens 30,000 jobs and the future of the industry."
Source: http://www.guardian.co.uk/environment/2012/jan/19/solar-subsidy-cuts-government-compromise
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