The government is facing a legal challenge over changes to Feed-in Tariffs (Fits) for renewable energy projects.
The Department for Environment and Climate Change (Decc) confirmed it had received a letter notifying it of the action.
Speaking at the Energy and Climate Change Committee meeting on investor confidence in the UK energy sector, a Decc spokesman said: “We have received a pre-action protocol letter in relation to the changes related to pre-accreditation, so obviously there is a conversation between lawyers at the moment.”
Decc would not clarify whether money had been set aside for a possible legal challenge over the changes.
No information was given during the committee meeting about the source of the challenge.
A spokesman from the Anaerobic Digestion and Bioresources Association said many in the industry were considering their positions and their options.
After a number of government policy announcements this year to cut support for the renewables sector, Decc announced in September that it was scrapping pre-accreditation from 1 October 2015.
This meant investors in renewables projects would no longer be able to lock into Fits support before project completion.
The move was widely criticised for threatening the viability of some projects and damaging investor confidence in the renewables industry.
But Decc claimed the move would help prevent the surges in deployment often seen after the announcement of tariff cuts, therefore protecting the scheme’s budget and keeping energy bills down.
Answering questions at the Energy and Climate Change Committee, Decc minister, Andrea Leadsom, said: “We have looked at it from all angles and believe the balance is fair [between the bill payer and the investor].”