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The sun will come out - but not tomorrow?

Having shown promising signs in 2013, the solar energy market in Northern Ireland seems to have hit a few stumbling blocks. With a number of barriers - both commercial and legal - there are concerns that development of solar in NI is not reaching its full potential.

Challenges 

Planning has posed a major problem, particularly for large-scale solar. The planning process in NI remains painfully slow compared to GB and the transfer of planning powers to the new Super Councils in April 2015 is creating further uncertainty in how applications will be treated. When developers compare a possible two year wait compared to six months in England, many will not even consider entering the NI market.

Grid connection is another hindrance; in areas where grid capacity is low, it can be too costly to develop new connections and due to new policy by NIE, the costs of applying for many grid connections have increased substantially even for small rooftop projects. With grid connection delays new projects could also miss the April 2017 deadline for receiving current subsidies. At this time, the level of subsidy after April 2017 remains unknown and in this respect we lag far behind GB where the first "Contracts for Difference" auction under the new subsidy regime has already taken place. Worryingly, large-scale solar did not fare well from this process. 

In England residential solar has been rolled out successfully largely thanks to ‘rent a roof’ solar schemes. However, in NI there are legislative issues that prevent many mortgage providers granting consent. If there is no opportunity for a residential solar market locally then it is increasingly unlikely that solar will develop in NI to the scale seen in England. 

Recent reductions in energy costs mean that in the short term there is less of a drive for cheaper sources of energy. This is in contrast to 2013 where rising energy prices and falling technology costs looked set to drive the demand for solar.

Opportunities

But it is not all gloom. Despite these barriers there remains, for the determined developer, significant scope for expansion of solar in the NI market. Although residential "rent-a-roof" schemes have difficulties that have yet to be fully resolved, the significant activity seen in the commercial rooftop and ground mounted sectors in England and Wales could well be reflected in NI. At present the relatively low level of penetration means there are plenty of rooftops and viable ground sites worth exploiting.  Ground mounted schemes can utilise both greenfield and brownfield sites and bring otherwise redundant land into productive use.

A recent solar park application in Northern Ireland generated substantial objections and threw the issue of large scale solar into the spotlight normally reserved for some wind farms. However, solar PV projects generally cause very little controversy during the planning stage because they have minimal visual impact. In fact, many smaller schemes do not even require planning permission. Even for the larger schemes, good site choice and community engagement before applications are submitted can often allay any concerns at a very early stage. 

At least for the next two years the subsidies offered through the Northern Ireland Renewables Obligation (NIRO) provide a stable and potentially attractive rate of return. The rates of subsidy are more generous than GB, particularly up to 50kW, which would include many commercial rooftop developments, and the subsidy rates for ground mounted schemes of 250kW and above remain attractive. With predictable rates of return over 20 years and relatively well established technology, many funders and investors see the merit in solar projects.  

Yes or no?

It is clear that while there are opportunities for solar in NI, there remain a number of major barriers that are preventing successful roll-out on the scale seen in England. Does the future looks bleak for solar energy? By taking a few actions to ensure any issues are kept to a minimum, we think the future still looks bright;

Site selection – there remain many areas where the grid is robust and has capacity for new connections. Early engagement with NIE and a clear understanding of any potential constraints will help to minimise delays further on in the development process. 

Public engagement – whilst wind farms, for example, raise concerns over visual impact and noise, do not assume that solar development will not generate objections. Early consultation with local residents will help to minimise concerns early on and speed up the planning process. Also careful preparation of planning applications will minimise delays in processing the applications. 

Think about the funders – investors and funders often have specific requirements for example in relation to "step-in rights" and on the bankability of the Power Purchase Agreement entered into with an electricity supplier. Ensuring that the legal documents are robust from the outset will also make the project more attractive for funders.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at April 2015. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

TLT LLP is a limited liability partnership registered in England & Wales number OC 308658 whose registered office is at One Redcliff Street, Bristol BS1 6TP England. A list of members (all of whom are solicitors or lawyers) can be inspected by visiting the People section of this website. TLT LLP is authorised and regulated by the Solicitors Regulation Authority under number 406297.

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