The government has lost it's Court of Appeal case surrounding a decision which blocked its attempts to reduce solar subsidies, which were originally supposed to be paid until April 2012.
The government had moved to more than halve the 43p per KWH payment made to households with solar panels, which it maintains are unsustainable.
The new 21p per KWH rate was due to take effect on systems installed after 12th December 2011, However, the government has said it will seek leave to take the case to the UK's Supreme Court.
The rulings will not affect households that have installed panels before the changes on 12 December, however those who installed after that date will now have an agonising wait for the supreme court ruling, to see if they qualify for 43p rate. The government's revised deadline of 3rd March 2012 just confuses the issue further and has left Householders, Solar panel manufacturers and installers in limbo, unsure of how best to proceed.
Solar businesses and campaigners have also warned that thousands of jobs could be lost as a result of the proposed tariff cut.
"We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to halve the number of installations," said Energy and Climate Change secretary Chris Huhne.
Employers' group the CBI said the government should abandon its legal battle.
"The judgement should be used to draw a line under this saga, which saw the government scoring a spectacular own goal and confidence in the renewables sector undermined," said director general John Cridland.
The High Court ruled that changing the tariffs in this way was "legally flawed", a decision the Court of Appeal has now upheld.
The change had particularly upset industry, as it affected projects which may already have been commissioned, but not installed.
"This decision has very important implications for the whole renewable energy sector in the UK," said Ben Warren, a partner at Ernst and Young.
The government claims paying the higher rate between December and March would cost the scheme £1.5bn over 25 years.
The tariff for surplus electricity exported to the national grid remains 3.1p per kilowatt-hour paid in addition to the tariff, and is unaffected by the changes.
Money shortage
There is also uncertainty about the sustainability of the reduced rate - as a rush of installations now may use up the scheme's remaining budget.
"The future of the feed in tariff beyond April 2012 is now hugely uncertain. Government and industry now need to work together to create a sustainable solar industry in the UK," added Mr Warren.
The Renewable Energy Association has called for the overall budget to be increased.
"The government's action and the subsequent court case had together thrown the solar industry into a state of extreme uncertainty," said chief executive Gaynor Hartnell.
"We now want to put this behind us as swiftly as possible, and work with government and supporters to secure a larger budget for small-scale renewable energy generation," she added.
