The Department of Energy and Climate Change (DECC) has refused to rule out further legal action if it fails to win an appeal tomorrow over its plans to rush through deep cuts to solar subsidies, potentially prolonging uncertainty over the future of the feed-in tariff scheme.

Court of Appeal judges will tomorrow morning decide if DECC can appeal against a High Court ruling, which last month declared that plans to effectively halve feed-in tariff incentives for installations completed after 12 December 2011 were unlawful.

Climate minister Greg Barker has consistently argued that an accelerated timetable for cutting solar incentives was necessary to prevent the feed-in tariff scheme exceeding its budget, even if that meant changes to the scheme would come into effect before the official consultation on the proposed reforms closed on 23 December.

According to Friends of the Earth, one of the parties leading the legal action against the government, the court will tomorrow decide whether to allow DECC to appeal against the original court decision. If it does, it will also pass judgment on the appeal.

However, it remains unclear whether tomorrow’s ruling will provide the solar industry with the clarity it is seeking over the future of feed-in tariff levels.

Barker confirmed last week that if DECC wins the appeal it will reinstate the 12 December effective cut-off date for the higher incentive rate, subject to the results of the consultation. Solar projects registered for the feed-in tariff after 12 December would then receive the higher 43p per kWh rate for three months, before dropping to the lower 21p/kWh rate from April 2012 for the remaining 25-year payment period.

However, following pressure from the solar industry, Barker also last week revealed DECC’s contingency plan if it loses the appeal, tabling a Written Ministerial Statement in parliament that would push the cut-off date back to 3 March, meaning any project registered after that date would only receive the higher tariff for one month before dropping to the same proposed lower rates.

Projects completed between 12 December and 3 March would then still have access to the 43p/kWh rate – a scenario the government has criticised on the grounds that the scheme’s spending cap means every installation accessing the higher rate means two sites cannot gain the new 21p/kWh rate.

The parties taking legal action against DECC have previously said they hoped the “rolled-up” format of the appeal hearing would speed up the process and prevent DECC taking the case to the Supreme Court if it is unsuccessful. The rolled-up hearing meant the government made its application for an appeal, and made the case for the appeal itself, at a hearing earlier this month.

However, a DECC spokeswoman told BusinessGreen it had not ruled out further legal action if it loses tomorrow.

“I think we wouldn’t rule out further court action at this stage,” she said. “But obviously we have got the contingency plan in place, so once we find out what is going to happen tomorrow we can say what our plans are.”

However, Charles Perry, a partner at SecondNature, which is backing the legal proceedings against DECC, urged the government to provide clarity for investors as soon as possible, adding that he would prefer DECC to fully adopt its contingency plan if it loses tomorrow, rather than continue the legal proceedings.

“We really need to move forward into a positive outcome for both the private and public sectors,” he told BusinessGreen. “We need solutions from the government and I think the 3 March option would be a good one.

“We can’t go round in circles over this any longer. We need clarity… and DECC needs to rebuild its trust with the private sector.”

The court ruling will also clear the way for the government to release its long-awaited response to the controversial consultation exercise into the original proposed changes and launch a full review of the wider feed-in tariff scheme, both of which are expected in late January or early February.

Fears are mounting that with the government warning the feed-in tariff scheme has already overspent for this financial year, ministers are under growing pressure to further cut levels of support for microgeneration technologies.

As a result, green campaigners and the renewables industry are urging the government to relax the spending cap for the popular scheme in order to maintain reasonable levels of support for emerging clean energy technologies.

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