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
[email protected]