Policy paper

Government Amendments to the Energy Bill 2015: Onshore Wind

Updated 8 October 2015

1. Purpose

This information paper provides an update on the Government’s grace period proposals for projects affected by the intended early closure of the Renewables Obligation to new onshore wind from 1 April 2016.

2. Background

On 18 June 2015 the Secretary of State for Energy and Climate Change announced to Parliament that the Government intends to close the Renewables Obligation (RO) across Great Britain to new onshore wind from 1 April 2016, one year earlier than planned. It was proposed that projects that met certain criteria at the time the policy was announced would be eligible for a grace period enabling them to accredit under the RO by 31 March 2017.

The Government has today (8 October 2015) tabled amendments to the Energy Bill 2015 which take into account the findings of an engagement exercise held with industry and other stakeholders between 7 and 31 July 2015 on the policy and grace period proposals.

The amendments seek to set out the grace period on the face of the Bill and to provide further detail on how this will work in practice. The grace period and supplementary amendments are intended to help protect wider investor confidence in the onshore wind industry. The amendments are summarised in more detail below. Full details of these amendments will be available on the Parliament UK website from Friday 9 October.

3. Confirmation of the grace period

Having considered the feedback and evidence provided the Government still believes that the amendments will ensure we strike the right balance between the public interests involved, including protecting consumer bills and ensuring the right mix of energy, and the interests of onshore wind developers and the wider industry.

We consider that the terms of the grace period will offer protection to those developers that have already made a significant financial commitment to projects which would have stood a reasonable chance of being able to accredit under the RO by 31 March 2017.

As such, the Government amendments confirm that projects which had in place, by the date of the announcement, relevant planning consents, a grid connection offer and acceptance or confirmation that no grid connection is required, and evidence of land rights, will still be able to accredit under the RO until the original closure date of 31 March 2017. These criteria are referred to in the amendments as the “approved development condition”.

4. Technical Amendments

In addition to the “approved development condition” grace period, the Government has introduced the following technical amendments to take account of the feedback and evidence from stakeholders:

1. An amendment to ensure that projects which would have otherwise been able to accredit under the RO by 31 March 2017 are not frozen out of the process. We are proposing to offer those projects which meet the grace period criteria additional time to seek accreditation if they can provide evidence that they have been unable to secure financing between 18 June (the date of the initial announcement) and Royal Assent. This “investment freezing condition” amendment takes into account evidence from industry and other stakeholders that investors may be unwilling to provide finance for projects during the passage of the Bill due to legislative uncertainty created by the Bill making its way through its Parliamentary stages. Some investors seem unwilling to finance GB projects until Royal Assent when there will be absolute certainty in relation to the final position on grace periods. We believe that this could affect projects which satisfy the “approved development condition”, including those which have already started construction.

2. An amendment to ensure projects remain eligible for the pre-existing grace period which entitles projects affected by unforeseen grid and radar delays to an additional 12 month period in which to accredit. The Government amendments would therefore 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 amendment is intended to provide a consistent approach to all onshore wind projects in GB eligible to accredit under the RO.

3. An amendment to extend the “approved development condition” so that this would capture projects which had their planning permission refused on or before 18 June, or where the relevant planning authority failed to determine a planning application where a decision was due (under the relevant statutory timescales) by 18 June, and which are then subsequently granted consent at appeal. The Government believes it is appropriate to extend the grace period to these projects on the grounds that had a correct or timely decision been made by the planning authority, such projects would have met the grace period criteria announced on 18 June.