Athos Solar GmbH and Others v The Secretary of State for Business, Energy and Industrial Strategy
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hickinbottom |
| Judgment Date | 01 November 2016 |
| Neutral Citation | [2016] EWHC 2782 (Admin) |
| Docket Number | Case No: CO/1461/2016 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 01 November 2016 |
[2016] EWHC 2782 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
PLANNING COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Hickinbottom
Case No: CO/1461/2016
The Queen on the Application of
Simon Murray (instructed by Prospect Law Limited) for the Third Claimant
Jennifer Thelen (instructed by Government Legal Department) for the Defendant
Hearing date: 1 November 2016
Approved Judgment
This claim concerns the consultation response of the Secretary of State for Energy and Climate Change published on 17 December 2015 entitled "Government response to consultation on changes to financial support for solar PV: Controlling spending on solar PV projects of 5MW and below within the Renewables Obligation" ("the December 2015 Consultation Response"). The consultation sought views on, amongst other things, the Secretary of State's proposal that, in the context of the withdrawal of Government subsidies from new small-scale solar photovoltaic ("PV") schemes, the evidence required to establish eligibility for grace periods, designed to protect projects not on stream by the cut-off date but in respect of which significant financial commitments had been made, should include evidence of the submission of a planning application on or before 22 July 2015, the date on which the consultation was launched. The December 2015 Consultation Response purported to clarify that requirement as being the submission of a valid planning application. In this claim, it is said that that was not clarification but, in substance, a change in the requirements; and the Secretary of State's decision to insist on that requirement was unlawful.
On 18 July 2016, Langstaff J refused permission to proceed with the claim, and I have before me now a renewed application.
Two preliminary points as to the parties. First, from July 2016, the functions of the Secretary of State for Energy and Climate Change were transferred to the Secretary of State for Business, Energy and Industrial Strategy, who is now the Defendant. Second, the Claimants are all members of the small-scale solar PV supply-chain. The First, Second and Fourth Claimants have formally discontinued their claim, leaving Lark Energy Limited ("Lark Energy") as the only extant Claimant. Simon Murray of Counsel has pressed the renewed application for permission to proceed on its behalf.
By section 1 of the Climate Change Act 2008, the Secretary of State is required to ensure that carbon emissions are reduced by at least 50% by 2050, using a baseline of 1990. In pursuit of that obligation, the Secretary of State put into place a number of subsidy schemes intended to support the generation of electricity by means of private-sector investment in renewable technology. From March 2011, those schemes operated under the umbrella of the Levy Control Framework ("LCF"), a policy issued by HM Treasury setting limits on the costs of the Secretary of State's levy-funded policies to ensure that the "fuel poverty, energy and climate change goals [are achieved] in a way that is consistent with economic recovery and minimising the impact on consumer bills."
One such scheme was the Renewables Obligation Scheme ("the RO Scheme", established by Order of the Secretary of State under section 32 of the Electricity Act 1989, which placed a "Renewables Obligation" ("RO") on UK electricity suppliers to source an increasing proportion of the electricity supplied from renewable sources. The scheme was administered by the Office of Gas and Electricity Markets, which issued Renewable Obligation Certificates ("ROCs") to generators who sold them to suppliers in return for a premium on the wholesale price of their electricity. Suppliers who failed to demonstrate compliance with the certificates were required to pay a penalty. The Government has acknowledged an obligation to projects within the scheme until 2027.
There is a statutory obligation to consult (amongst others) electricity suppliers and generators of renewably sourced energy before making or closing an Order made under section 32 of the 1989 Act (see sections 32L and 32LB).
In December 2010, the Secretary of State issued a consultation document entitled "Electricity Market Reform", which proposed closing the RO Scheme to new solar PV projects, in favour of long term contracts in the form of a Feed-in Tariffs Scheme; but projects that were already accredited under the RO Scheme as at 31 March 2017 would continue to be supported at the rate of subsidy applicable as at that date. Grace periods were identified for projects that had commissioning dates on or close to 31 March 2017. Following consultation, those proposals were implemented in the Renewables Obligation Closure Order 2014 (SI 2014 No 2388).
However, on 13 May 2014, the Secretary of State published a further consultation paper entitled "Consultation on changes to financial support for solar PV", which proposed an earlier closure date for solar PV projects of more than 5MW, namely 1 April 2015, because large-scale solar PV was deploying at a much faster rate than expected, as a result of which there was a prospect that the annual limit on the overall costs of levy-funded policies would be exceeded. The proposals included a grace period to protect developers who had already made "a significant financial contribution to projects" (paragraph 23 of the consultation paper), and could provide specified evidence that they had satisfied that condition, including "relevant planning consents dated no later than 13 May 2014" (i.e. the date of the start of the consultation) (paragraph 33(b)). By requiring specific evidence, the Secretary of State effectively defined what she considered to be "a significant financial contribution" for these purposes.
The Secretary of State published her response to that consultation on 2 October 2014. In line with the proposals, she determined to close the RO Scheme to solar PV projects of over 5MW from 1 April 2015 with provisions for a grace period largely as proposed, but with some changes to the required evidence of significant financial commitment to a project, notably replacing the requirement for planning permission by 13 May 2014 with a requirement that a planning application must have been submitted by that date.
In taking those decisions in respect of large-scale projects, the Secretary of State indicated in her consultation response that she would continue to monitor the small-scale solar PV deployment pipeline; and, if that indicated that deployment was growing more rapidly than could be afforded, she would consider taking further measures to protect the LCF (paragraph 1.21). The decisions taken in that response concerning large-scale projects were implemented in the Renewables Obligation Closure (Amendment) Order 2015 (SI 2015 No 920).
The decision to close the RO Scheme to new large-scale projects in 2015 was the subject of a judicial review challenge in this court, in which Lark Energy was involved. Four grounds of challenge were raised, including the contentions that the closure as made was bad for retrospectivity and it frustrated the legitimate expectation of (amongst others) those in the supply chain such as Lark Energy. The claim was dismissed by Green J ( R (Solar Century Holdings Limited) v Secretary of State for Energy and Climate Change [2014] EWHC 3677 (Admin)), whose judgment was upheld by the Court of Appeal ( [2016] EWCA Civ 1177). Mr Murray appeared as Junior Counsel for the claimants/appellants in that case.
Following monitoring, it appeared to the Secretary of State that solar PV deployment through smaller scale projects was at a significantly higher rate than that expected in 2014. On 22 July 2015, she published a further consultation document entitled "Consultation on changes to financial support for solar PV" ("the July 2015 Consultation Document"), which proposed the early closure of the RO Scheme to new projects of below 5MW on 1 April 2016. She proposed to "offer grace periods equivalent to those offered when the RO was closed to new solar PV capacity above 5MW". The proposed grace period criteria incorporated a requirement for evidence of a "significant financial commitment", including:
"Confirmation that a planning application had been received by the relevant planning authority in respect of the project no later than 22 July 2015 [i.e. the date of the start of the consultation] or a declaration that planning permission is not required."
Any project that fell within the grace period criteria was to have until March 2017 to be commissioned and linked to the grid.
As a result of the publication this response, that day (22 July 2015), a considerable number of applications for planning permission were received by planning authorities for small-scale solar PV projects. Many of these applications were incomplete, with information that did not comply with the requirements for such applications as set out in the various Development Management Procedure Orders and which was insufficient to enable the authority to determine the application (see, e.g., paragraph 9 of the statement of Tom Luff dated 24 May 2016: Mr Luff was, at the relevant time, the Head of the Renewables Programme Team at the Department of Energy and Climate Change). On the evidence before me, it seems that developers considered that they "were left with little choice" but to lodge applications...
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