Fears that the government will reduce future feed-in-tariffs (FITs) have prompted concerned firms to threaten legal action to reclaim investment costs.
Independent energy consultant David Byers represents a group of firms developing renewables businesses to take advantage of FIT legislation. In an open letter, obtained by NCE, he said the group would take legal action to recoup investment costs of around £1M if the government fails to safeguard the legislation.
“Should the government reduce FIT rates, my reputation would be damaged and all involved parties would have confidence in UK government reduced to utter cynicism,” said the letter. “This would undoubtedly steer investment abroad.”
“In the event of any negative impact,” it continued, “the consortium I represent would consider legal action for recovery of costs, foregone future profits and punitive damages.”
The team, which includes consultant Gifford as well investors, lawyers, and property groups, is ready to launch this month, but Byers fears the group will lose its business case if the government reduces its FIT rates.
“I have the largest photo-voltaic farm in the UK ready to sign, but this confusion about the funding has put it into doubt”
“A reduction by just 5% to 10% in tariff rates will remove any profit margin,” he said. “I have the largest photo-voltaic farm in the UK ready to sign, but this confusion about the funding has put it into doubt,” added Byers.
Last week CEOs from 63 leading energy firms wrote a joint letter to the government warning that alterations to FIT rates could arrest renewables investment.
FITs were introduced in April and designed so that utility firms pay those who own a renewable energy system for every kilowatt hour they generate up to 5MW.
Generators can be paid up to 41.3p/kWh depending on the type and size of system. The tariffs were not due to be reviewed until 2013. However, the letters were prompted following speculation that the government will reduce the tariffs.
The Department for Energy and Climate Change has said it wants to provide “clarity” and “regulation certainty” with FITs. However this month’s Comprehensive Spending Review will look at policies on the government’s books, including those that will add to consumer bills.
“Although the government isn’t directly funding the renewable energy projects they will result in higher energy bills. That could lead to increased inflation, which the government wants to avoid,” said cost consultant EC Harris head of energy Paul Stapleton.