Renewables incentivisation policy in Northern Ireland is largely influenced by European and UK energy policy. At present amending legislation allows for the provision of considerable incentives for solar installations. This incentive has resulted in a rush to solar by many solar providers particularly as providers are aware that the incentive will only last to April 2015.
It is now proposed to reduce the incentive considerably from 1 April 2015 to 1.6 NIROCs per MW (for installations of less than 250KW) instead of the present 4 NIROCs per MW for installation of up to 50KW and 2NIROC's UP TO 250KW. It remains to be seen how this will impact on the roll out of solar installations in Northern Ireland. Funders of schemes are understandably unsettled as they face further uncertainty as a result of the termination of the NIROC incentive system in 2017 for new entrants; The introduction of a feed in tariff for installations below 5 MW and a contact for differences regime for larger installations above 5 MW after 2017 creates unwelcome uncertainties.
Another hurdle to the expansion of this industry has been the Business Tenancies (NI) Order 1996. This legislation protects business tenants by allowing them to extend their lease at the end of its term. A landlord can only terminate such a lease on certain restricted grounds detailed in the legislation. Many domestic mortgage providers are reluctant to agree to a solar panel lease to a solar panel provider as this will be a business lease coming within the legislation. The Landlord risks the lease being extended beyond its initial term and in some circumstances if he terminates the lease he will have to pay compensation. Similarly some house owners with solar panel leases on their houses have seen their sales fall through due to a reluctance of a purchaser mortgage's provider to fund the purchase. This reluctance is often because of the existence of a potential business tenancy solar panel lease.
The large scale commercial solar panel sector has also been impacted as a result of the Business Tenancies legislation. A large manufacturing company faced with the high energy costs prevalent in Northern Ireland may wish to install solar panels on its factory roof. However, again the landlord company faces the possibility of a lease (typically 20 years) being extended under the Business Tenancies Legislation and this uncertainty is not something the company or its funders would wish for. From the point of view of the solar panel installer or their funders they do not wish to agree anything less than a lease as a licence agreement (which is the only alternative to a lease) gives them no security of tenure over their solar panel assets.
Solar panel providers (some of whom come from GB) find it difficult to understand the hurdles in Northern Ireland caused by the Business Tenancies Legislation. In Northern Ireland they cannot contract out of the equivalent legislation as they do in GB.
It is a pity that the roll out of what should be a beneficial scheme which will help Northern Ireland to meet its renewable target and reduce the cost of energy to business or domestic consumers has been handicapped by our legislation. Perhaps Government should amend the legislation here to make it more business friendly by allowing contracting out where both parties agree. The Northern Ireland Law Commission did suggest a scheme whereby parties could contract out of the Business Tenancies Legislation if a solicitor for each party certified agreement. However the Commission recommendations have not been implemented due to the debate about which circumstances the opt out should cover.
Another issue for the solar industry locally has been NIE's preference for a conservative connection policy for solar panel installations. NIE prefer a more expensive connection protocol than those that exist in GB. This more extensive engineering protocol is as a result of an interpretation of Electricity regulations. Again a small amendment to subordinate legislation might be of assistance to overcome the issue.
Despite the above handicaps solar installations are proving to be a popular choice for both domestic consumers and commercial operations installing larger schemes. Whether the reduction in NIROC entitlement in the Renewable Banding review will impact substantially on this remains to be seen. However if NI wishes to achieve its renewable target of 40% renewables by 2020 and reduce its dependence on expensive energy imports solar is part of the mix of renewables that will be necessary to achieve that very ambitious goal.