With the opening of the Contracts for Difference (“CfD”) scheme on 16 October 2014 (for more on CfDs, see the A-D edition of the A-Z of issues in renewable energy projects), the Renewables Obligation (“RO”) scheme entered a transition period leading up to the general closure of the RO scheme to new applicants on 31 March 2017. As part of this process, the Renewables Obligation Closure Order 2014 (the “Closure Order”) provides for a number of grace periods allowing continued RO accreditation of projects after 31 March 2017 up to a longstop date (varying according to the technology in question), assuming that certain requirements can be met.
Specific provisions affect large-scale solar photovoltaic (“PV”) generating stations, and these are dealt with below.
Types of grace period – other than large-scale solar PV
The Closure Order provides for a number of different grace periods extending the longstop date for accreditation under the RO beyond 31 March 2017. These are summarised below.
Only the “enabling financial decisions” grace period provides confirmation of grace period entitlement pre-construction of the generating station. The other grace periods are applied for at the point of accreditation (post-construction) along with specific supporting evidence:
- “Enabling financial decisions” grace period: this is a 12-month (or 18-month for biomass with CHP) grace period for generating stations using gasification/pyrolysis (“ACT”), offshore wind or dedicated biomass with CHP, where the operator has successfully submitted a notice of intent on or before 9 November 2014;
- “Radar or grid connection delay” grace period: this is a 12-month grace period for generating stations where radar or grid connection delays prevent commissioning on or before 31 March 2017. When applying for accreditation, the following supporting documents must be provided:
- a grid / radar works agreement;
- a copy of a document from the works provider estimating or setting a date for the completion of the works at no later than 31 March 2017;
- a letter from the works provider confirming that the relevant grid / radar works were completed after the 31 March 2017 and that the delay was not due to a breach of any of the terms of the grid / radar works agreement by the station’s developer; and
- a declaration by the operator that the station would have been commissioned on or before 31 March 2017 had the relevant grid / radar works been completed to schedule;
- “Signed investment contracts” grace period: this is a 12-month grace period for projects which have secured an investment contract (an instrument broadly similar to CfD, but issued before the formal establishment of the CfD regime) which is then terminated or otherwise ceases to have effect for one of a limited number of permitted reasons. A letter from the Secretary of State is required to evidence this;
- “Dedicated biomass cap” grace period: this is an 18-month grace period for projects falling within the Government’s 400MW dedicated biomass cap.Qualification requirements include: at the point of accreditation, the developer must submit a letter to Ofgem from the Secretary of State dated on or before 31 March 2017 confirming the allocation of a place under the cap along with a declaration that the place under the cap has neither lapsed nor been revoked; and
- “Scottish offshore wind” grace period: in relation to Scotland, an 18-month grace period is available for offshore generating stations using test and demonstration wind turbines or floating wind turbines.
Types of Grace Period – large-scale solar PV
Unlike for other technologies, the RO scheme closed to solar PV generating stations with generating capacity greater than 5MW on 1 April 2015. Three large-scale solar PV-specific grace periods do, however, allow eligible operators to apply for RO accreditation until 31 March 2016. These grace periods are:
“Significant investment” grace period: in order to be eligible for this grace period, the operator will need to supply:
- documents demonstrating that an application for planning permission for the station was made (or granted) on or before 13 May 2014 (or a declaration that planning permission was not required);
- a copy of an offer from a licensed network operator made on or before 13 May 2014 to carry out grid works in relation to the station and documents evidencing acceptance of the grid works on or before 13 May 2014 (or a declaration from the operator that no grid works were required); and
- a declaration by the operator that the developer (or connected person) was, in relation to the land on which the station is situated, as at 13 May 2014: an owner or lessee; had entered into an agreement for a lease; had an option to purchase or lease; or, was a party to an exclusivity agreement;
“Grid delay” grace period: this operates similarly to the grid delay grace period for non-large solar PV generating stations, except that the date 31 March 2015 is substituted for 31 March 2017; and
“Preliminary accreditation” grace period: here, it must be demonstrated that the preliminary accreditation of the generating station was effective on or before 13 May 2014 and that, since that time, it has not been invalidated.
The grace period regime provides a valuable additional timeframe during which accreditation under the RO can be obtained. Applicants will need to be careful to ensure that they can provide the necessary evidence to support their case for grace period eligibility and comply with the prescribed timescales, including ensuring that RO accreditation takes place before the relevant longstop date.