DECC announced on 18 June 2015 that it was closing the Renewable Obligation for onshore wind on 1 April 2016, one year earlier than planned. Unsurprisingly, this move caused considerable alarm in the renewable energy industry and concern over the impact on projects already in the pipeline.
The wider industry raised a series of concerns with the Government during the July consultation exercise, In response, the Government announced on Friday 8 October a number of amendments to the Energy Bill. These amendments could see around 2.9GW of onshore wind capacity eligible for the grace periods.
The following grace periods have been proposed:
- Approved development – projects which had in place on or before 18 June 2015 the relevant planning consents, a grid connection offer and acceptance or confirmation that no grid connection was required will still be able to accredit under the Renewable Obligation until the original closure date of 31 March 2017;
- Planning permission – this extension will apply where a project had planning permission refused on or before 18 June 2015 or where the planning authority failed to determine an application in accordance with statutory timescales by 18 June 2015 and the relevant project is subsequently granted consent at appeal. Under such circumstances a qualifying project can benefit from the extension provided by the approved development condition;
- Unforeseen grid/radar delay – projects remain eligible for a pre-existing grace period where they have been affected by unforeseen grid and radar delays. By way of example, if a project was seeking to accredit by 31 March 2016 (as proposed by DECC in June), it would now have until 31 March 2017 to accredit. Likewise, where the investment freezing condition applies or the approved development condition applies, affected projects will have an additional 12 months to accredit should they be affected by unforeseen grid/radar delays; and
- Investment freezing – due to uncertainty caused by the announcement in June 2015, a number of projects which had satisfied the approved development condition have been unable to secure finance (with some investors unwilling to provide finance until the Energy Bill receives Royal Assent). Projects that can demonstrate they have struggled to obtain finance as a consequence will now have an extended grace period up to 31 December 2017.
Patrick Sweeney at TLT comments, "The announcement by DECC in June 2015 created significant delays to a number of projects. We welcome the proposed grace periods, which could provide investors with much needed certainty and we urge the Government to do everything possible to ensure that the Energy Bill receives Royal Assent as soon as possible. This will then enable the industry to proceed to deliver landmark projects that will continue to contribute to the process of decarbonising our economy.
"We remain of the belief that the Government should have engaged with stakeholders and consulted with the industry ahead of announcing the closure of the Renewable Obligation a year earlier than planned. Had it done so, it may have been possible to avert some of the damage to investor confidence in the industry. We hope that the Government will listen to the renewable energy sector moving forward."