The decision was a victory for environmental campaigners Friends of the Earth (FoE) and two solar companies – Solarcentury and HomeSun – who challenged the proposals and said they were creating “huge economic uncertainty”.
Energy Secretary Chris Huhne wants to cut feed-in tariff subsidies (FITs) – payments made to households and communities that generate green electricity through solar panels – on any installations completed after December 12 this year.
But Mr Justice Mitting, sitting in London, said the minister was “proposing to make an unlawful decision”.
Friends of the Earth’s executive director Andy Atkins said after the decision was announced: “These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs.
“We hope this ruling will prevent ministers rushing through damaging changes to clean energy subsidies – giving solar firms a much-needed confidence boost.
“Ministers must now come up with a sensible plan that protects the UK’s solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.
“Solar payments should fall in line with falling installation costs but the speed of the Government’s proposals threatened to devastate the entire industry.”
The reductions are being hurried in because the Government believes they are too generous and costly in the face of the falling costs of solar technology and the number of people wanting to take advantage of the scheme.
Today Mr Justice Mitting said he was satisfied that the Government’s proposals were already having “a significant impact” on the solar panel industry.
He declared that implementing Mr Huhne’s proposals, as planned, in April next year by referring back to the December 12 deadline, which had fallen in the middle of a consultation period, would be unlawful.
He said the Energy Secretary was entitled to make modifications for “the statutory purpose” of promoting small-scale, low carbon electricity-generating schemes.
But changes made by reference to the earlier date of December 12 “are not in my judgment calculated to further that statutory purpose”.
He added: “On the contrary, they will tend to undermine the confidence of those participating in the market for small solar systems.”
He observed that a significant capital outlay was required to install solar panels, and the payback for that investment under the FITs scheme took place over 25 years.
The judge refused the Energy Secretary permission to appeal against his ruling saying his “prospects of success” were insufficient to justify permission.
The minister must now ask the Court of Appeal itself to hear his case.
The judge said he would do all that he could to ensure an early hearing in the new year if the appeal judges agreed to hear the case.