Closing the Renewables Obligation to onshore wind – grace period criteria

Out-Law Analysis | 18 May 2016 | 2:46 pm | 7 min. read

FOCUS: The 2016 Energy Act closed the Renewables Obligation (RO) to new onshore wind across Great Britain as of 12 May 2016, subject to certain 'grace period' exceptions.

This means that, since 13 May 2016, any new or existing onshore wind generating stations have been unable to apply for accreditation or add additional capacity under the RO, unless that capacity is eligible under one of five available grace periods.

In Northern Ireland, the enactment of the 2016 Renewables Obligation Closure Order (Northern Ireland) on 16 March 2016 confirmed the closure of the Northern Ireland Renewables Obligation (NIRO) to new large-scale onshore wind from 1 April 2016. 'Large scale' refers to new installed capacity of 5MW or above.

Here, we summarise the grace periods and applicable criteria, as set out in the legislation.

Approved Development condition

Projects that meet the 'approved development' condition have until 31 March 2017 to accredit under the RO.

To meet this condition, projects must be able to demonstrate that they had planning permission, a grid connection agreement and the necessary land rights in place on or before 18 June 2015.

For new onshore wind, evidence must be provided to the relevant authority along with the application for accreditation of the station. For additional capacity, documents must be provided to the relevant authority on or before the date on which the authority made its decision that additional capacity could form part of an onshore wind generation station.

Planning permission

For the purposes of the legislation, 'planning permission' may include:

  • grant of planning permission on or before 18 June 2015, any conditions as to the time period within which the development to which the permission relates must not have been breached - evidenced by a decision notice from the relevant planning authority confirming planning consent has been granted for the station or capacity, dated on or before 18 June 2015, plus confirmation that any applicable time period conditions were not breached;
  • evidence that planning permission was initially refused, but granted after 18 June 2015 following an appeal or judicial review, any conditions as to the time period within which the development to which the permission relates must not have been breached – evidenced by a decision letter from the relevant planning authority confirming the appeal was granted, plus confirmation that any applicable time period conditions were not breached;
  • successful appeal after not receiving a planning decision due by 18 June 2015, with any applicable time period conditions not breached - evidenced by a decision notice from the relevant planning authority confirming appeal was granted and a letter from the Secretary of State, Welsh or Scottish minister confirming that the application was not referred to them, plus confirmation that any applicable time period conditions were not breached;
  • declaration by the operator of the station that planning permission is not required, in the form of a document signed by the operator of the station to the best of their knowledge and belief.

Grid connection agreement

For the purposes of the legislation, 'grid connection' can include:

  • copy of an offer from a licensed network operator made on or before 18 June 2015 to carry out grid works, accompanied by evidence that the offer was accepted on or before that date;
  • declaration by the operator of the station that no grid works were required to be carried out by a licensed network operator to enable station to be commissioned, or the additional capacity to form part of the station, signed by the operator of the station to the best of their knowledge and belief.

Land rights

Evidence of land rights should take the form of a declaration, signed by the operator following the template provided in Ofgem's final guidance. This declaration should state that, as of 18 June 2015, a relevant developer or person connected with the relevant developer of the station or additional capacity:

  • was an owner/lessee of the station;
  • had entered into an agreement to purchase/lease the land;
  • had an option to purchase/lease the land; or
  • was a party to an exclusivity agreement for the land.

Grid or Radar Delay condition

Projects that meet the 'grid or radar delay' condition have until 12 May 2017 to accredit under the RO, subject to two further grace periods.

Generating stations that have been subject to grid connection or radar works delays that were not due to a breach by a developer must be able to provide evidence of a grid works agreement, expected completion date before the start of the relevant grace period and confirmation of the delay from the relevant network operator.

For new onshore wind, evidence must be submitted to and received by the relevant authority by the station operator, on or before the date on which the authority made its decision to accredit the station. For additional capacity, evidence must by submitted to and received by the relevant authority on or before the date on which the authority made its decision that the additional capacity could form part of an onshore wind generation station.

For the purposes of a grid and radar delay to which no additional grace periods apply, the expected completion date for the project must be on or before 12 May 2016.

Grid delay evidence

As evidence of a grid connection delay, the station operator must be able to supply:

  • copy of an offer to carry out grid works from a network operator setting out location of the grid works and the connection capacity, with confirmation that this offer was accepted by the operator on or before 12 May 2016;
  • copy of a document from or on behalf of the relevant network operator which estimates or sets a 'planned grid works completion date' no later than 12 May 2016, which also confirms location of the grid works and connection capacity;
  • letter from the network operator to the operator of the station explicitly confirming that the relevant grid works were completed after the planned grid works completion date, and that this failure was not due to a breach by the generating station developer;
  • declaration by the operator that the station would have been commissioned or the additional capacity would have formed part of the station, on or before 12 May 2016, if the relevant grid works had been completed on or before the planned grid works completion date, signed and following the template provided in Ofgem's final guidance.

Radar delay evidence

As evidence of radar works delay, the station operator must be able to supply:

  • copy of an agreement between the generating station developer and a party that is not a generating station developer to carry out radar works, required in relation to the generating station that the grace period application is for and which was entered into before 12 May 2016;
  • copy of a document from or on behalf of the party to the radar works agreement which estimates or sets a 'planned radar works completion date' no later than 12 May 2016;
  • letter from the party to the radar works agreement to the generating station developer explicitly confirming that the radar works were completed after the planned radar works completion date, and that this failure was not due to a breach by the generating station developer;
  • declaration by the operator that the station would have been commissioned or the additional capacity would have formed part of the station, on or before 12 May 2016, if the relevant radar works had been completed on or before the planned radar works completion date, signed and following the template provided in Ofgem's final guidance.

Approved Development and Investment Freezing condition

Generating stations where previously agreed finance was suspended as a result of the legislative uncertainty before the 2016 Energy Act became law have until 31 January 2018 to accredit under the RO, provided that they also meet the approved development condition as set out above.

For new onshore wind, evidence must be provided to the relevant authority with the application for accreditation of the station. For additional capacity, evidence must be provided to the relevant authority on or before the date on which the authority made its decision that additional capacity could form part of an onshore wind generating station. In both cases, the letter from a recognised lender must be dated no later than 9 June 2016.

Along with the evidence set out under the approved development condition above, the station operator must also be able to supply:

  • declaration by the operator that, as of 12 May 2016, it required funding from a recognised lender before the station could be commissioned or additional capacity could form part of the station; that the recognised lender was not prepared that funding until the 2016 Energy Act was enacted; and that the station would have been commissioned or the additional capacity would have formed part of the station on or before 31 March 2017 had the funding been provided before 12 May 2016. This declaration should be signed by the operator and follow the template provided in Ofgem's final guidance;
  • a letter on headed paper dated on or before 9 June 2016 from the directors of the recognised lender to the operator of the station, explicitly stating the confirmation required by the legislation.

Approved Development and Grid or Radar Delay condition

Projects that meet the approved development condition and subsequently experience an unforeseen grid or radar delay will benefit from a further grace period, giving them until 31 March 2018 to accredit under the RO.

The station operator must be able to supply the same evidence, by the same deadlines, as for the approved development condition; followed by the same evidence as for the grid or radar delay condition. The expected completion date for the works in this scenario must be on or before 31 March 2017.

Approved Development and Investment Freezing and Grid or Radar Delay condition

Projects that meet the approved development condition, but where previously agreed finance was suspended as a result of the legislative uncertainty before the 2016 Energy Act became law, but which subsequently experience an unforeseen grid or radar delay will have until 31 January 2019 to accredit under the RO.

The station operator must be able to supply the same evidence, by the same deadlines, as for the combination of the approved development and investment freezing conditions above. They must then be able to supply the same evidence as for the grid or radar delay condition. The expected completion date for the works in this scenario must be on or before 31 January 2018.

Chris McGarvey and Ian McCarlie are energy and finance experts at Pinsent Masons, the law firm behind Out-Law.com.