“Surge in enquiries” from solar firms seeking compensation against DECC
Green policy news – by Louise Bateman
2nd February 2012
A growing number of solar firms are seeking legal advice about compensation for losses incurred as a result of the Government’s move to retrospectively cut the Feed-in Tariff [FiT] for solar electricity, according to a leading legal advisor to renewable energy firms.
Legal firm
Osborne Clarke, which has been advising solar companies for over 20 years, said it has received "a surge of enquiries" from companies asking whether they can pursue
claims against the
Department of Energy and Climate Change (DECC), following last week’s
Appeal Court decision that went against Ministers in the long-running
solar FiT dispute.
"We've been approached by a number of companies wanting to know whether they can seek compensation for losses they’ve incurred as a result of DECC’s retrospective application of subsidy cuts," Clare King, renewable energy lawyer at Osborne Clarke, said. "The answer is that much will depend on the particular circumstances of each claim."
King said companies "may have a claim for damages if they can show that they incurred losses as a direct result of DECC’s actions". However, she warned that nobody would know for certain until the Supreme Court has considered DECC’s final appeal.
Compensation billShe added it was too difficult to gauge at this stage if the Government could be facing a large compensation bill or not. "It really depends on what grounds the Supreme Court finds for or against DECC – that’s if it gives DECC permission to appeal," she explained. "If DECC have got it wrong, and a company can establish a direct link between those grounds and the losses companies have suffered, potentially many companies may have a claim.
"At this stage, it’s hard to tell what sort of exposure DECC might have in terms of compensation claims."
But she said a "flood" of compensation claims could exposes DECC to significant budgetary losses.
"If DECC is given permission to appeal it would be bad news for the solar industry generally because the current uncertainty would last for longer," she said.
The Supreme Court has indicated it will take around eight months for a final appeal to reach the courts and two months before permission to seek a ruling could be granted. And if it believes a Government department could face big losses from compensation claims it is more likely to hear DECC’s final appeal.
Banding together
Osborne Clarke is advising companies to band together with other firms in a similar position to make any action a more realistic option. Many solar firms are small making it impossible for them to act alone because they would not have access to the sort of funds necessary to pursue DECC through the courts.
"We are working with a growing number of companies who are looking to share information and costs so they can take swift action once we have a final judicial decision," King said.
Energy Secretary Chris Huhne announced last week, following DECC’s defeat at the Court of Appeal that he was seeking permission to appeal to the Supreme Court – the highest court in the land.
The Court of Appeal upheld a High Court ruling that Government plans to cut the FiT subsidy for small-scale solar photovoltaic installations were unlawful.
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