The Energy Bill and the early closure of the Renewables Obligation for Onshore Wind

In this article, we look at the Energy Bill and the early closure of the Renewables Obligation for Onshore Wind.

16 March 2016

On 18 June 2015 the Government announced its intention to close the Renewables Obligation for onshore wind one year early, in 2016. The Energy Bill 2015-16 purports to do this.

The Energy Bill, as introduced to the House of Lords, included a clause legislating for the closure of the Renewables Obligation in relation to onshore wind at the end of March 2016. It stated that “no renewables obligation certificates are to be issued under a renewables obligation order in respect of electricity generated after 31 March 2016 by an onshore wind generating station which is accredited after that date”.

There was a great deal of debate in the House of Lords on this clause and the associated grace periods, which had been introduced by amendment, resulting in the clause and the grace period drafting being removed through an amendment at Report stage.

On making its way to the House of Commons and following the Committee stage of the Bill, the early closure clause was reinserted into the Bill together with the grace period drafting, which sets out specific circumstances in which renewables obligation certificates may be issued after 31 March 2016. Such circumstances include:

  • where there has been a grid or radar delay (the “grid or radar delay condition”);
  • where the project had planning consent, an accepted grid offer and land rights on or before 18 June 2015, being the date of the Government’s early closure announcement (the “approved development condition”);
  • where funding for the project has been withheld until enactment of the Energy Act 2016 due to uncertainty over whether the Act would be enacted, or its wording, if enacted (the “investment freezing condition”).  

Specific requirements must be met in order to qualify for the grace periods permitted under each set of circumstances and these are set out in the grace period clauses. The wording of these clauses is therefore of crucial importance to onshore wind farm developers who may be impacted by the early closure of the Renewables Obligation for onshore wind.

Amendments to the Energy Bill, particularly in respect of the approved development condition, have been tabled on behalf of renewables industry bodies at the various stages of the Bill as it has progressed through the Houses. The themes underpinning many of these amendments are aimed at ensuring that developers, who had invested significant sums of money in obtaining consent for their project prior to the Government’s announcement on 18 June 2015, are not unfairly discriminated against.

The next stage of consideration of the Energy Bill will be the Report Stage and the Third Reading on Monday 14 March 2016. The Bill will thereafter return to the House of Lords for consideration of the amendments made in the House of Commons. It will be interesting to see the approach the House of Lords take when considering the amendments to the Bill, particularly given that some of the amendments are the reinsertion of clauses previously deleted by the House of Lords.

This is clearly an important issue for the onshore wind industry and we are monitoring the Bill’s progress closely. Watch this space for further updates and feel free to come and see us at Stand Q60 at All-Energy 2016 in Glasgow on 4 and 5 May, by which point the Bill may have become the Energy Act 2016.