Solar power companies have won a victory against government cuts to taxpayer subsidies after a High Court judgment that will prompt embarrassment in Westminster.
A judge on Wednesday upheld a legal challenge by Friends of the Earth and two solar companies against the speed of changes to “feed-in tariffs” for household solar schemes.
He decided that the government had acted unlawfully because the cuts came into effect on December 12, nearly two weeks before a consultation on the issue was completed.
Howard Johns, Chairman of the Solar Trade Association, said the decision would give hope to 29,000 employed in the industry.
“The government has acted unlawfully and it is right that they are held to account. Now they need to act to rectify the damage,” he said. “We are happy to have cuts but not if they kill the industry.”
But the Renewable Energy Association warned that the court judgment could prompt another “rush” for solar power, putting the longer-term future of subsidies for other renewables in doubt.
The government said it would seek leave to appeal against the decision, prompting doubt about what rate will be paid to people who install solar panels after the original December 12 cut-off date.
Greg Barker, climate change minister, said the current high tariffs for solar were “not sustainable” and would still have to be cut to protect the budget – which is funded by consumers through energy bills.
Ministers decided to halve the subsidy after being “overwhelmed” with demand from households and companies.
Caroline Flint, shadow energy secretary, urged ministers to repair what she called the damage to the industry.
“Today’s ruling stops the government in their tracks. The government must now go back to the drawing board and bring forward more measured proposals,” she said.
The news comes as two committees of MPs will on Thursday launch a critical report about the solar cuts.
The High Court setback is the latest sign of the coalition’s green credibility being eroded as ministers focus more on deficit reduction than the environment. George Osborne, the chancellor, has voiced increasingly anti-green sentiment since the autumn.
It also comes amid insecurity for the global solar industry, after US manufacturer Solyndra filed for bankruptcy, Germany’s Solon filed for creditor protection and BP said it would close its solar division.