In an exclusive interview with Renewable Energy Focus, Hendry said that the decision to lower tariff rates from 12 December, instead of April as originally expected, was to protect the feed-in tariff budget from a four-month "fire-sale" to install solar panels before the rate was cut by over half:
"If we had proposed that the tariff change would happen in the spring, then every salesman would have been going round the country, knocking on doors, saying, 'come on, guys – sign up, we know this is going to halve in April. We can get all of that done and installed in that time', and we would have seen a complete fire sale."
The resulting bubble would have soon burst, with disastrous consequences for the tariff as a whole, the minister claimed.
"We saw immense growth in the installation of feed-in tariffs up until the December date of change. But what we would have then seen would have been an absolute explosion, and that would have finished the scheme," he said.
"So it would have meant that the money which we were looking to use for future years for other technologies would simply have been used up, and the only way of managing [a situation] where people can move from concept to installation in a few weeks, is by having a very tight timescale."
But the timescale, announced on 31 October, and which implemented the cuts three weeks before the consultation on the process had finished, landed the Government in hot water. And some in the solar industry were furious that the speed of the changes had not allowed them time to adjust their business plans.
Daniel Green, chief executive of solar company Homesun, which took the Government to court because of the timescale in December, disputed Hendry’s viewpoint, saying that the Government’s interference had actually created the boom and bust that it sought to avoid, costing the feed-in tariff budget £100 million.
According to Green, as a result of Government action, the number of installations went from an average of 15,000 per month over August, September and October - to 45,478 in November, and 52,079 from 1-12 December. After this, numbers fell dramatically, he said, citing figures that place the number of installations from 12 December to 10 January at 1,713:
“That is appalling management, creating a crisis situation and absolutely causing the boom and bust they said they wanted to avoid,” he said. “If this was private sector, heads would roll – it is not how you run a successful business.”
The Department of Energy and Climate Change (DECC) lodged an appeal to the High Court decision on 4 January, and Hendry told Renewable Energy Focus that he is still sure that the Government made the right decision: "We did look very carefully at other options, but we were absolutely convinced that the scale of the problem, where the investment was running at three times ahead [of the] level predicted, could only be responded to by very dramatic and early action."
He added: "It cannot be right that people on low income are paying higher electricity so that wealthier people can get a 10%, or 12% rate of return guaranteed for 25 years. That is simply wrong, and that if we hadn’t acted to deal with that, as we could see the evidence of the cost falling, then we would have compounded that problem.”