On 8 October, DECC announced it was putting forward amendments to the Energy Bill to clarify the criteria that projects will have to meet in order to benefit from a grace period (i.e. allowing them extra time to accredit after the Renewables Obligation (RO) closes to onshore wind from 31 March 2016).
See our previous articles for the background.
At the moment (8 October) we only have the Government's summary of the amendments; the actual text of them will be published tomorrow on the Parliament UK website (http://services.parliament.uk/bills/2015-16/energy/documents.html) and we will issue a fuller update early next week when we have seen this. The summary is, however, very useful.
The 'approved development condition'
This confirms what had already been announced. Projects which are able to demonstrate that, as at the date of Amber Rudd's original closure announcement (18 June 2015) they had:
- Relevant planning consents (but see the extension to this below)
- A grid connection offer and acceptance, or confirmation that no grid connection is required
- Ownership by the developer or proposed operator of the land on which the station is to be situated OR an option or agreement to lease the land OR an exclusivity agreement in relation to the land
will still be able to accredit under the RO until the original closure date of 31 March 2017.
Extension to the approved development condition
The first part of the approved development condition (relevant planning consents) will be extended to capture projects which had their planning permission refused on or before 18 June 2015, or where the relevant planning authority failed to determine a planning application within the statutory timescales by 18 June, and in either case were subsequently granted consent at appeal. The Government says that it thinks it appropriate to extend the grace period to these projects as if a correct or timely decision had been made in the first place, they would have met the grace period criteria announced on 18 June.
The 'investment freezing condition'
There is also some unexpected good news. The Government is introducing further measures in response to industry's views that investors may be unwilling to provide finance for projects until the Energy Bill has become law, as until then there is no guarantee that the grace period criteria will not change. This could affect projects which satisfy the approved development condition criteria above.
To address this, projects that meet those criteria and can provide evidence that they have been unable to secure financing between 18 June 2015 and Royal Assent will be given extra time to seek accreditation, up to 31 December 2017.
Its not immediately clear how many projects this will help as the announcement talks about projects which have failed to secure finance between 18 June and Royal Assent and not projects which close before Royal Assent but have nonetheless suffered delays due to the 18 June announcement. We will have to wait for the exact wording of the amendments to the Bill.
The pre-existing grace period
The amendments to the Energy Bill will clarify that projects that meet the early closure grace period criteria will still be eligible for an additional 12 month grace period to accredit if they are affected by unforeseen grid and radar delays. Again, the wording of today's announcement is not entirely clear as it says this will "allow projects which are seeking to accredit by the new closure date (31 March 2016), or the existing closure date (if they satisfy the 'approved development condition') or 31 December 2017 (if they satisfy the 'investment freezing condition') with an additional period of 12 months in which to accredit if they suffer from unforeseen grid/radar delays." This suggests to us that projects satisfying the 'investment freezing condition' have until 31 December 2018 to accredit. That would be great news for those projects affected if that is indeed the intention but we will have to wait to see what the wording of the amendment actually says.
RenewableUK reacted positively to the announcement. Deputy Chief Executive Maf Smith said "It's good to see that the government has acknowledged the financial uncertainty caused by these changes and the additional time offered will help to rebuild investor certainty."
As ever, the devil will be in the detail and because the grace period criteria are being enacted by way of primary legislation (Act of Parliament) there can be no absolute certainty until the Energy Bill makes it onto the statute book, which is intended to be early 2016. The industry will just have to hope the Government stays true to its word in the meantime.