Out-Law News 3 min. read

Northern Ireland 'to align' onshore wind subsidy closure plans with rest of UK


Northern Ireland's main subsidy mechanism for renewable energy generation projects should be closed to new onshore wind from 1 April 2016, keeping it in line with changes to subsidies across the rest of the UK, its enterprise minister has announced.

The Department of Enterprise, Trade and Industry (DETI) is consulting on changes to the Northern Ireland Renewables Obligation (NIRO), which include 'grace periods' for projects that meet certain eligibility criteria, until 14 October (14-page / 214KB PDF). Enterprise minister Jonathan Bell said that the "unusual" two-week consultation period would "give as much certainty" to the industry as possible.

"Whilst renewable energy in Northern Ireland is a devolved matter, it is clear from discussions with DECC [the UK government's Department of Energy and Climate Change] that should we maintain a different policy on the NIRO closure to new onshore wind than in GB, the cost impact of that decision would be borne solely by the relatively small number of NI consumers rather than by all consumers across the UK," said Bell, in his introduction to the consultation paper.

"I am keen to optimise the contribution which the renewables sector can make but I am also very well aware of the impact of costs on domestic and industrial energy users and the need to balance the two," he said.

Energy law expert Richard Murphy of Pinsent Masons, the law firm behind Out-Law.com, said that DETI's change of approach was not a surprise.

"Having adopted a 'wait and see' approach towards Great Britain, Northern Ireland was behind the curve in preparing for the new mechanism and dealing with transitional issues," he said. "Speaking recently at the NI Energy Forum, we predicted budgetary pressures might necessitate a change of tack from DETI. With Whitehall refusing to meet the cost differential, something had to give."

The UK announced in June that it intended to legislate to close the renewables obligation (RO) to onshore wind in England, Wales and Scotland as of April 2016, one year before the scheme closes to all projects and is replaced by the new contracts for difference (CfD) mechanism. The policy change is intended to address the projected unaffordability of UK subsidies for renewables, due to higher than anticipated uptake and the falling costs of the various technologies involved.

The NIRO will close to technologies other than onshore wind on 31 March 2017. A decision is still to be taken as to whether Northern Ireland will then transition to CfDs in line with the rest of the UK. Onshore wind projects that meet the eligibility criteria set out in the consultation will also be able to apply to accredit under the NIRO until this date; and a further 12 month grid and radar delay grace period will be put in place for projects that demonstrate that they meet the relevant criteria.

In order to qualify for the grace period provisions, planned projects must have relevant planning permission; a grid connection offer and acceptance and evidence of land rights as of the relevant eligibility date. Cluster-connected projects will have until 30 October to meet these criteria; while non-cluster connected projects must meet the criteria as of the date of the consultation, 30 September. DETI said that it had been able to negotiate a later eligibility date for cluster-connected projects as the policy was "sufficiently different to connection policy in GB" to justify this.

'Clustering' is a policy adopted by Northern Ireland Electricity (NIE) Networks which takes into account the country's "landscape and cultural heritage" when planning new renewable energy generation infrastructure. The policy provides that generating infrastructure be grouped together in order to share network infrastructure as far as possible, in order to minimise the environmental and visual impact of multiple grid connections.

"Northern Ireland was a small voice in the debate over a new support mechanism, and if it was to seek access to the Contracts for Difference framework we see difficulties for NI generators competing against their GB counterparts for support," said energy law expert Richard Murphy. "However, if it was to maximise use of devolution and seek to capitalise on the Single Electricity Market with the Republic of Ireland, it could create an all-island mechanism much more fit for purpose."

"The intention of devolution is to pursue different policies when they are of benefit to the local region. For the future of the NI renewable energy sector, the time has come to use it or lose it," he said.

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