The U.K. Wednesday lost a bid to overturn a court ruling that its planned cuts to solar power subsidies were illegal, a decision that could allow thousands of consumers to claim the higher payouts introduced by the previous Labour government.

The Court of Appeal unanimously rejected Energy Secretary Chris Huhne's argument that he had sufficient authority to back-date the lower subsidy to include solar projects completed within days of a consultation period on the matter coming to an end.

Huhne said the government plans to appeal the decision in the Supreme Court.

Plans to cut the "feed-in tariff" solar subsidy were announced in October, with government ministers arguing the proliferation of cheaper solar panels should translate to a reduced payout to those consumers and businesses prepared to install them.

Huhne wants to reduce payments made to households and businesses who installed their solar panels after Dec. 12. But a legal challenge from two solar manufacturers, SolarCentury and HomeSun, and environmental group Friends of the Earth led to a high court judge ruling that the government had mishandled the implementation of the cuts.

Opponents of the cuts say they could put thousands of jobs in the solar industry at risk, but the government argues it can't afford to pay the higher rate indefinitely and that reducing the tariff now is the only way to continue the subsidy.

The case is the latest sign of Europe 's once booming renewables sector being rolled back as sovereign debt worries crimp government spending and cheaper Far Eastern manufacturers put price pressure on the companies who make solar panels and wind turbines.

While U.K. solar manufacturers account for a small proportion of the European industry, larger peers have also suffered as a result of subsidy cuts and increased Chinese competition. Germany's Q-Cells SE (QCE.XE) and SolarWorld AG (SWV.XE) have posted loses in recent months, while Norway's Norwegian solar power equipment maker Renewable Energy Corp. ASA (REC.OS) has temporarily shuttered 50% to 60% of its capacity at two Norwegian plants.

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