Northern Ireland proposes further changes to Renewables Obligation

Out-Law News | 29 Oct 2012 | 9:19 am | 2 min. read

The Department of Enterprise, Trade and Investment (DETI) has published a further consultation on aspects of the Northern Ireland Renewables Obligation (NIRO), it has announced.

The consultation (16-page / 173KB PDF) relates to proposed changes to banding levels for large-scale solar photovoltaic (PV) projects, biomass sustainability and value for money and grace periods for combined heat and power (CHP) projects. It is envisaged that the new rates will come into operation on 1 April 2013, alongside previously-announced changes to NIRO.

Energy law expert Richard Murphy of Pinsent Masons, the law firm behind, said that the supplementary consultation was unsurprising following similar proposals for England and Wales, published by the Department of Energy and Climate Change (DECC) last month.

“As expected, the DETI consultation largely mirrors the DECC consultation which was published last month and received criticism in some quarters for the size of the proposed cuts to biomass and solar ROCs,” he said.

On its website, DETI said that its consultation and that being undertaken by DECC were “closely linked”. However, the consultation proposes a six-month ‘grace period’ over and above the DECC plans for CHP projects up to 30 September 2015, where those projects intend to accredit under NIRO and are not yet able to benefit from a Renewable Heat Incentive (RHI) subsidy.

Northern Ireland intends to have an appropriate RHI tariff for large biomass projects in place by 1 April 2015, but DETI is unlikely to be in a position to consult on this before mid-2013. The ‘grace period’ is intended to assist those projects already in development, or nearing financial close, which require more certainty as to support levels.

“There does not appear to be any evidence to suggest that Northern Ireland should propose different rates to those in the rest of the United Kingdom,” DETI said in its consultation document. “However, any verifiable evidence which suggests otherwise would be welcome.”

The Renewables Obligation (RO) is the main financial support mechanism currently used by the UK Governments to encourage the development of large-scale renewable electricity generation projects. It places an obligation on suppliers to source an increasing proportion of the electricity they supply from renewable sources. Banded Renewables Obligation Certificates (ROCs) were introduced in 2009, changing the RO from offering a single level of support for all renewable technologies to one where support levels vary in relation to the cost of developing that technology and its future potential.

The new consultation proposes replacing the staggered support for solar PV above 5MW capacity under the original NIRO Banding Review consultation with lower rates, in order to reflect the substantial fall in the cost of the technology since that consultation was published in October 2011. Support provided to new dedicated biomass power will be capped to ensure “value for money”, while the biomass used in power stations will have to meet tough new sustainability criteria. These include a requirement for wood fuel to come from sustainably managed forests, and a proposal to set clear targets to reduce the carbon intensity of biomass projects.