The Government lost its bid to overturn a High Court ruling that its plans to cut subsidies for solar panels on homes are unlawful on Wednesday.
The Court of Appeal rejected Energy Secretary Chris Huhne's claim that he had the power to go ahead with the controversial scheme.
Opponents say, if allowed, the proposals would put 29,000 jobs in the solar industry at risk.
They say projects have already been abandoned and jobs lost because of the current uncertainty.
Huhne wants to reduce 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 last year.
High Court judge Mr Justice Mitting ruled that it would be unlawful to implement plans to approve the cuts in April this year by referring back to the December 12 deadline.
The deadline fell 11 days before the end of a consultation period on the proposals.
Lawyers for Huhne argued before three appeal judges that Mr Justice Mitting had gone wrong in law and the Secretary of State possessed the necessary power to go ahead with his plan.
But Lord Justice Lloyd, Lord Justice Moses and Lord Justice Richards today disagreed.
Lord Justice Moses ruled Parliament had not conferred on Huhne "a power to make a modification (in tariff rates) with such a retrospective effect".