Business First May-June 2017 Business First May 2017 - Page 34

ENERGY LAW Northern Ireland Renewables Obligation - is there a saving grace? R asks Glenn Watterson, Mills Selig enewable energy and the government subsidies connected to it have been topics of intense scrutiny lately. Whilst the Renewable Heat Incentive has rarely been out of the press, the closure of the incentives scheme in relation to small onshore wind generating stations has also been the cause for much debate within that industry. Whilst the incentive scheme was closed on 31 March 2017 all is not necessarily lost for developers and investors of small onshore wind (≤5MW) projects. Legislation has prescribed certain criteria that, if met, will enable a small onshore wind project to avail of the NIRO incentives. The NIRO Closure (No. 2) Order 2016 introduced grace periods for stations affected by the early closure of the incentive scheme. If the grace period conditions, and all other NIRO eligibility criteria, are met, the grace periods enable small onshore wind generating capacity to gain accreditation under the NIRO between 1 July 2016 and 31 March 2019. The remaining grace periods are as follows: 1. Grace period available from 1 July 2016 to 30 June 2017 Grid and/or radar delay: A grace period for generating stations that meet the ‘grid and/or radar delay’ condition. These are generating stations that would have commissioned by 30 June 2016 (the ‘primary date’), but have been subject to grid and/or radar delays that were not due to a breach by a developer. 2. Grace period available from 1 April 2017 to 31 March 2018 ‘Approved development’ AND ‘investment freezing’: A grace period for stations that meet both the ‘approved development’ condition and the ‘investment freezing’ condition. These are generating stations that would have commissioned by 31 March 2017, but were delayed beyond this date because the developer was unable to secure required finance due to uncertainty over whether the NIRO Closure (No. 2) Order 2016 would be made and its wording if made. 3. Grace period available from 1 April 2017 to 31 March 2018 ‘Approved development’ AND ‘grid and/or radar delay’: A grace period for stations that meet both the ‘approved development’ condition and the ‘grid or radar delay’ grace period. These are generating stations that would have commissioned by 31 March 2017 (the ‘primary date’), but have been subject to 32 www.businessfirstonline.co.uk grid and/or radar connection delays that were not due to a breach by a developer. 4. Grace period available from 1 April 2018 to 31 March 2019 ‘Approved development’ AND ‘investment freezing’ AND ‘grid and/or radar delay’: A grace period for generating stations that meet the ‘approved development’ condition, and the ‘investment freezing’ condition, and the ‘grid or radar delay’ condition. These are generating stations that would have commissioned by 31 March 2018, but: • were delayed beyond that period because the developer was unable to secure required finance due to uncertainty over whether the Order would be made and its wording if made; and • were then unable to commission by 31 March 2018 (the ‘primary date’) because of grid and/or radar connection delays that were not due to a breach by a developer. For full details of the evidence and/or declarations that must accompany an application for a grace period and definitions of key terms please refer to Ofgem’s (the government body responsible for managing the implementation of NIRO) latest guidance note at the following link: www.ofgem.gov.uk/ system/files/docs/2017/03/ niro_small­scale_onshore_wind_closure.pdf From consultations with our clients it appears that grid delay will be the most common cause for a grace period application. It should be noted that where a grid delay is asserted the evidence required to be submitted will include: • evidence of an accepted agreement with NIE to carry out grid works; • a copy of a document from NIE confirming that at the date of receipt of the connection application for the generating station, it was NIE’s intention to complete the works no later than the ‘primary date’; • a letter from NIE confirming that (i) the relevant grid works were completed after ‘primary date’, and (ii) in NIE’s opinion, the failure to complete the relevant grid works on or before 31 March was outside the control of the generator and was not due to any breach by it of any agreement with NIE; and • a declaration by the generator that, to the best of its knowledge and belief, the station would have been commissioned on or before the ‘primary date’ if the relevant grid works had been completed on or before that date. The ‘primary date' being the final date before the start of each grace period, i.e.: • 30 June 2016 for the grace period 1 July 2016 to 30 June 2017; • 31 March 2017 for the grace period 1 April 2017 to 31 March 2018; and • 31 March 2018 for the grace period 1 April 2018 to 31 March 2019. Ofgem have asserted that it does not require pre­accreditation in order to accredit under a grace period, and they do not grant pre­approval of grace period evidence. Eligibility for a grace period will only be assessed alongside an application for full accreditation – meaning developers could find themselves in the undesirable position of not knowing if they will obtain a grace period until it is too late. What we have now is a climate of uncertainty for developers and investors. Whilst the criteria does appear to be very narrow, developers are urged to read Ofgem’s guidance in detail and our energy team are willing to discuss any queries they might have. MOREINFORMATION For more information contact Anna-Marie McAlinden or Glenn Watterson at 028 9024 3878 or email anna-marie.mcalinden@ millsselig.com or glenn.watterson@millsselig.com