Levy Control Framework trumps “certainty” of Renewables Obligation closure date

04 Mar 2016

The Court of Appeal this week upheld the Secretary of State’s decision to close the Renewables Obligation to new large-scale solar photovoltaic (PV) projects two years early, despite previous statements by the Government (made in the interests of providing “certainty” to investors) that the RO would remain open until 31 March 2017, in a decision which is likely to have significant implications for the future of similar renewable energy subsidies.

Dismissing Solar Century Holdings Ltd’s appeal from the judgment of Green J, the Court held that the existence of Government’s Levy Control Framework, which caps the cost of levy-funded spending for energy and  climate change goals, prevented any legitimate expectation arising to the effect that the RO would not be closed before that date if deployment of solar PV exceeded forecasts.

Floyd LJ held that the Government was entitled to formulate and re-formulate policy when rational grounds existed for doing so, unless to do so would amount to an abuse of power. Statements in the Levy Control Framework that the Government was committed to “maintaining support levels” for “existing investments” did not include investments which were in the pipeline but which had not yet been accredited under the RO scheme.

Further, the adoption of a “grace period” of an extra year for certain pipeline projects to accredit did not offend against any principle against retrospectivity and was not unfair in the public law sense, despite the fact that the relevant date by which projects would have to meet the criteria to qualify for the grace period had already passed when the closure order was made. The Secretary of State had set the date of the publication of his consultation proposals, to prevent a “gold rush” of projects seeking to qualify for accreditation in time. It it was lawful to close the scheme in its entirety to new entrants with effect from 1 April 2015, it was difficult to see how it could be unlawful to soften that blow by extending the scheme for a further year to those who had reached a particular stage of investment.

To view the full judgment, please click here.

Robert Palmer appeared for the Secretary of State.