Posted by: Nick Duxbury26/01/2012
Call me old fashioned, but I think there is something to be said for at least trying to be the bigger person in an argument.
That means, if you are winning, not to crow and goad, and if you are wrong, to admit it. Right now neither the government nor the solar lobby seem to want to learn any lessons from their bitter clash.
First off, the government. Four judges have now ruled that the cutting of the FIT with just six weeks notice and before the consultation process was even complete was illegal.
That means it was wrong. Wednesday’s decision was, ahem, decisive. On both occasions – in the High Court before Christmas, and in the appeal yesterday - the government was told that, not only had it acted illegally in its retrospective action, but it also had no chance of appealing.
Were the government a private organisation, only the most stubborn/litigious challenger would continue pushing against the letter of the law.
Shareholders would put the brakes on very swiftly as the legal bills racked up. Well, it’s not private money – it’s taxpayers’ money. And Chris Huhne’s dismissal of £66,000 as ‘a few thousand’ next to the £1.5 billion he claims he is saving consumers by intervening demonstrates where the moral high ground starts to fall away into the low ground.
To date, even if you disagree with it, the government’s appeal is understandable. Yes tens of thousands of pounds of tax payers’ cash is a fair price to pay if the government has consumers’ bills in mind. But now, after it has been made very clear that the government was wrong it is very hard to justify continuing to appeal the decision.
The government is seeking permission to appeal in the Supreme Court, thus eking out the period of uncertainty in which potential investors will not know whether or not they would receive the 43.3p/kWh FIT or the 21/kWh rate. This is time wasting. It feels extremely calculated.
We report this week on several landlords gearing up to take advantage of this narrow window in which they might be able to claim the 43.3p rate before 3 March when the rate will definitely fall to 21p.
This is exactly what the government wants to avoid. Its budget is blown and if even one 100,000 home social landlord PV scheme goes ahead before 3 March it will slip further in the red. As we report tomorrow, Stockport Homes alone stands to make an additional surplus of £5.8 million if the government is denied an appeal in the Supreme Court. That is huge.
This scheme was designed to be viable at the 21p rate, so it was going ahead anyway.
But the 100,000-home Merseyside scheme will only go ahead if the FIT rate is 43.3p. Uncertainty is still holding it back. From the government’s perspective, maintaining that level of uncertainty will hold back the majority of opportunistic installations between now and 3 March.
Hence, the attempt to appeal in the Supreme Court. If they win, then they have saved a hell of a lot of cash and made a point of principle. If they lose, then, ah well – at least they prevented a gold rush of FIT seekers, and can always sleep soundly at night in the knowledge that they were acting in the best interests of bill payers. And if they are denied permission to appeal, then that is bad news.
But at least they have held back the tide for another valuable week.
It is hard not feel that the government is playing the legal system to fight a battle they never expected to win in order to save money in the long run.
If you accept this hypothesis of damage limitation (however short sighted that might appear given the huge damage inflicted on trust in the government and investor confidence ahead of the green deal) then it is even harder not to feel the pain of the solar lobby.
They have fought a good fight and are being frustrated by what appears to be extremely disingenuous tactics from the government. Just as, on the one hand climate change minister Greg Barker offers sound bites on Twitter such as ‘win, lose or draw today, important we move forward together, drive down costs and step up deployment’, on the other, he extends the period of uncertainty in the face of a strong legal slap down. I can only imagine how galling that must feel.
However, the solar industry must not legitimise the government’s arguments by acting foolishly.
Within an hour of the verdict, I was already receiving press releases from companies feverishly selling a second ‘gold rush’.
One release from a company that I will save the embarrassment of naming said: ‘CONSUMERS SET FOR SOLAR BONANZA AS GOVERNMENT LOSES RIGHT TO APPEAL OVER FEED-IN-TARIFFS’. Homeowners have been given a short-term window of opportunity to enjoy a solar power “gold rush”.’
A solar bonanza – is that really on the cards? And if it is, surely it’s not sensible? Is this not a bit like throwing fuel on a fire?
Another one: ‘In a swift u-turn the government has doubled financial incentives for installing solar panels following a successful court case by Friends of the Earth. Energy experts are advising to install panels now, as there will never be a better time.’
Er, what u-turn is this? I don’t recall seeing one of those?
First of all, it goes without saying this is hugely misleading and just as calculated as the government’s attempt to appeal again in the Supreme Court.
Until the legal battle is over, there remains considerable uncertainty over what the FIT rate will be between 12 December and 3 March. To promise returns at the 43.3p rate is mis-selling a product that should be about carbon reduction and saving energy bills rather than a potentially mythic return. In short it is unethical.
Secondly, regardless of your views on the way the government bungled the FITs saga to date, it is difficult to argue that the 43.3p rate wasn’t too high and that they were wrong to act. Even Friends of the Earth acknowledge the need for a cut to the FIT.
It is therefore irresponsible to begin hyping yesterday’s judgement as a ‘gold-rush’ to be taken advantage of.
Mr Barker has already warned that every home receiving FITs at the 43.3p level now will deny households of receiving it at the 21p rate after 3 March. Why would firms justify the government’s arguments? This kind of behaviour suggests that some elements of the solar industry have not learned from the last four months saga.
As tempting as it may be to lash out or do whatever can be done to retrieve some much needed business, it is important for the solar industry to continue to hold the moral high ground that it worked so hard to win – because that is the only way long term trust can be rebuilt.
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