‘To PV or not to PV’: An Analysis of the High Court’s Recent Treatment of Solar Energy

This analysis examines two important judicial reviews concerning financial supports for solar photovoltaic (PV) systems: Solar Century Holdings Limited & Others v Secretary of State for Energy and Climate Change (hereafter Solar Century),1 and Breyer Group Plc and Others v Secretary of State for Energy and Climate Change (hereafter Breyer Group).2 The former case concerns large-scale PV systems, and the latter case concerns small-scale systems. The following analysis begins by addressing the background, arguments and reasoning underpinning Solar Century, then proceeds to treat these elements in Breyer Group. A Commentary section then juxtaposes and compares both of the decisions. Given that certain financial mechanisms are at issue in these cases, it is useful to be clear on the form and nature of these mechanisms from the outset. The government introduced a feed-in tariff (FIT) scheme in April 2010 to stimulate low-carbon electricity generation, with a focus on small-scale generation.3 The FITs apply to a range of renewables, including, but not limited to, small-scale solar PV (at issue in Breyer Group). Under the scheme electricity supply companies make payments to small-scale electricity producers who generate their own electricity through renewable means. The ‘generation tariff’ describes the payment made to the generator of the renewable electricity, and the ‘export tariff’ describes payments made for electricity exported to the National Grid.4Breyer Group is concerned only with the generation tariff. Solar Century, by contrast, engages the Renewables Obligation (RO), which the UK Government is presently phasing out in favour of Contracts for Difference (CfD).5 The RO was introduced in 2002 to incentivise large-scale renewable electricity development, placing licensed UK electricity suppliers under an ‘obligation’ to source a particular share of the electricity that they supply from renewables. The level underpinning the obligation is set every year by the Department of Energy and Climate Change (DECC),6 and increases each time. Ofgem issues Renewables Obligation Certificates (ROCs) to eligible renewable electricity generators based on the amount of renewable electricity that they have generated, which the generators then sell to suppliers for the regular wholesale electricity price plus a premium. Ofgem then receives the ROCs from the suppliers, compelling any particular suppliers who fail to submit sufficient quantities to pay buy-out prices. Suppliers traditionally transfer the RO compliance costs to consumers via their energy bills. The RO will close to new generators in 31 March 2017: however, accredited generators will continue to receive support up to 2037 (assuming that one can trust the government’s stated commitments, on which see more below).