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Renewables Obligation - will your project benefit from a grace period?

In May 2014, the government announced the closure of Renewables Obligation (RO) support to large solar PV installations. This was followed in June and July last year with announcements that the RO would close to onshore wind and small solar PV. In each case, the government has expressed an intention to put in place a grace period, so that projects that had made substantial financial commitments prior to the date of the announcements would not be unfairly prejudiced. 

There has been confusion around how far along the planning process a project has to be to qualify for this grace period. The problem is augmented by the fact that the planning criteria differ for large solar PV, small solar PV and onshore wind installations. 

So what will a project need to show, in planning terms, to qualify for a grace period?

Large solar PV (over 5MW)

The announcement of the closure of the RO to large solar PV was made on 13 May 2014. 

To qualify for the grace period, the planning requirement that had to be met was that (unless planning permission had been obtained or was not required for the station) there was "evidence that an application for planning permission for the station was made on or before 13 May 2014". Planning permission for these purposes did not include outline planning permission (or planning permission in principle, in Scotland).

The Ofgem guidance sets out the evidence that could be provided as "a letter or email from the relevant planning authority that identifies the station in question by technology and location, and states that the application was made on or before 13 May 2014."

Small solar PV (up to 5MW)

On 22 July 2015, a consultation was issued which proposed that, in order to qualify for a grace period, the following evidence would have to be provided to Ofgem: "Confirmation that a planning application had been received by the relevant planning authority in respect of the project no later than 22 July 2015 or a declaration that planning permission is not required."

This differed from the position with large solar PV, as it was proposed that evidence would need to be provided to show that the planning application had been received, rather than evidence that a planning application had been made. The 17 December 2015 response to the July consultation commented that "Evidence from the consultation suggests that a number of invalid or incomplete planning applications were made on 22 July 2015 following publication of the consultation document. The government has therefore decided to clarify that the requirement is for evidence of a valid planning application as set out in planning legislation across Great Britain. We expect developers would meet this requirement through a letter/email from their local planning authority."

This made it clear that simply putting in a half-hearted attempt at a planning application would not make a project eligible for a grace period. In England, the definition of a "valid application" is set out in article 34(4) of The Town and Country Planning (Development Management Procedure)(England) Order 2015. The list of items that need to be submitted along with the application is extensive and includes requirements to submit any necessary plans, design and access statement, and fees. Individual local planning authorities also have their own specific requirements in relation to additional items that need to be submitted.

The consultation response suggested that it would not be enough simply to submit the application; evidence of this would be required. The response set out that developers would be expected to meet this requirement through a letter/email from the local planning authority.

The Renewables Obligation Closure Etc (Amendment) Order 2016 was laid before Parliament last week. It requires "evidence that a valid application for planning permission for the station was made on or before 22 July 2015." Ofgem issued draft guidance on 27 January, and this is open for consultation until 8 March 2016. It sets out the evidence that could be provided as follows: "a letter or email from the relevant planning authority that identifies the station in question by technology and location, and states that the application made (submitted) in relation to the station on or before 22 July…constituted a valid application." The guidance goes on to say that "Determining whether a 'valid' application was submitted on or before 22 July will be done by the relevant planning authority. We expect that generators will show their application is valid through a letter or email from their planning authority confirming that a valid planning application for the station that is seeking accreditation has been submitted, and stating the submission date of the complete application (ie the date that the final piece of required documentation was submitted)."

The draft guidance makes it clear that the relevant date is the date on which the planning application was submitted; not the date on which it is reviewed by the local planning authority. The guidance includes a template that can be used by local planning authorities to confirm that a valid planning application was submitted on or before 22 July 2015. However, use of this template is not mandatory, so it remains to be seen whether local planning authorities will use it.

As a reminder, where a project benefits from the "significant financial commitment" grace period, it will still have until 31 March 2017, rather than 31 March 2016, to be commissioned and apply for accreditation under the RO. It will also continue to benefit from the "grandfathering policy", meaning that having been initially accredited for a particular level of ROC support, it should continue to receive that same level of ROCs for the full 20 year lifetime of the RO support period.

Based on the documents published by government on 17 December, it also seems to be the intention that projects which benefit from a "significant financial commitment" grace period will avoid any adverse impact under the proposed ROC banding review. Specifically, even where a grace period project does not commission until after the date when lower ROC banding rates are introduced (expected to be 1 June 2016), it will remain eligible - due to its grace period status - for pre-banding review support levels.

Onshore wind

The announcement that the RO would be closed to onshore wind from 31 March 2016 was made on 18 June 2015. This closure will be dealt with in the Energy Bill, which is currently making its way through Parliament.

In relation to the planning requirement, on 8 October 2015, the government stated that it envisaged that the grace period would apply to projects which are able to demonstrate that they have relevant planning consents dated no later than 18 June 2015. The project must, therefore, have progressed further in the planning process than a solar PV project (in respect of which a planning application only needs to have been submitted).

As at 3 February 2016, the relevant sections of the Energy Bill referred to the "approved development condition". The part of this that relates to planning applications provides that there must be evidence that:

  • an application for planning permission under the Town and Country Planning Act 1990 (except outline planning permission) [or under the Town and Country Planning (Scotland) Act 1997] was made on or before 18 June 2015 for the station or additional capacity;
  • the period allowed under section 78(2) of the 1990 Act [or section 47(2) of the 1997 Act] ended on or before 18 June 2015 without any of the things mentioned in section 78(2)(a) to (b) of the 1990 Act [or section 47(2)(a) to (c) of the 1997 Act] being done in respect of the application;
  • the application was not referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act [or section 46 of the 1997 Act];
  • 1990 Act permission or 1997 Act permission was granted after 18 June 2015 after an appeal; and
  • any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.

As currently drafted, evidence of all and each of these has to be provided to satisfy subsection (4) of section 32LJ. This cannot be the intention. However, it must be noted that the Energy Bill is still making its way through Parliament so it is likely that it will be subject to further amendment.

Contributor: Alexandra Holsgrove Jones

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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