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CHRIS KAYE JOINS PROSPECT’S NUCLEAR TEAM

Prospect is pleased to announce the further development of its multi-disciplinary infrastructure practice through Chris Kaye joining the firm as an expert on the negotiation and management of multi-billion pound infrastructure projects, particularly in the nuclear sector. On behalf of the Department of Energy, Chris led the review of Hinkley Point C’s waste and decommissioning plans, providing advice to the Secretary of State on the approvability of the power station’s Funded Decommissioning Programme, and liaising with private and public sector advisory bodies.

Prospect remains the only regulated firm to offer combined legal and technical services to clients in the infrastructure sector and its position is further strengthened by the addition of Chris Kaye.

Chris has over 40 years experience in negotiating, managing, and assuring the performance of multi-billion pound strategically and technically complex contracts within Government and private sectors. From 2006 to 2016 and prior to joining Prospect Group, Chris was a function head of a major UK Non-Departmental Public Body, where he was responsible for assurance and oversight of the private sector nuclear operator’s decommissioning strategy, planning and costing where the Government has an interest in its funding and risks. This work was primarily directed at assuring the robustness of detailed plans for decommissioning the UK’s most modern nuclear power station fleet and associated spent fuel liabilities, with a total value of c. $25bn.

Chris has also led the assurance, on behalf of the UK’s Department of Energy, of all three of the UK’s new nuclear power plants’ decommissioning plans and cost estimates, in order to support the UK Government’s decision on whether or not to approve the operator’s liabilities funding arrangements for this first of a kind development. This included Hinkley Point C.

Outside the UK, Chris also led assurance reviews of Canadian, Swedish and Swiss nuclear facilities’ decommissioning plans on behalf of their respective governments and has provided consultancy advice to the Taiwanese and Chinese governments and private enterprises. Prior to 2006, Chris worked as an independent consultant on various technical assignments for major clients including the UK Atomic Energy Authority, Arthur D Little and the UK Government, significantly influencing the eventual decision to create the Nuclear Decommissioning Authority (NDA).

Chris also participated in reviews of private sector companies’ performance as part of the UK Business Excellence Award process utilising the European Foundation for Quality Management Business Excellence model. He has also worked in a variety of roles in the UK electricity supply industry. Initially covering waste management R&D and policy, for 12 years Chris led the negotiation and management of all contracts for the supply of uranium, new fuel, and spent fuel management services for the UK’s private sector nuclear fleet. Chris has also been a ‘high risk projects’ reviewer for the UK Cabinet Office Infrastructure and Projects Authority, participating in major government infrastructure projects in overseas construction, justice, immigration, rail franchise and national emergency planning. He is a Member of the Chartered Institute of Purchasing & Supply.

Prospect Law and Prospect Advisory provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.       

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

For more information please contact us on 020 7947 5354 or by email on: info@prospectlaw.co.uk.

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APPEAL FAILS FOR JUDICIAL REVIEW OF EARLY CLOSURE OF RENEWABLES OBLIGATION TO LARGE-SCALE SOLAR PV

Prospect Law Limited acted for the Appellants in Solar Century Holdings Ltd and Others v Secretary of State for Energy and Climate Change [2016] EWCA Civ 117

The Solar Century Holdings Ltd case concerned the legality of the decision by the Secretary of State for Energy and Climate Change to bring to a premature close a statutory scheme supporting the generation of electricity from renewable sources. Jonathan Green, senior solicitor at Prospect Law, examines the case in more detail and concludes that the judgment is likely to result in reduced investment in large-scale renewable energy projects as a consequence of ‘pipeline’ investments remaining vulnerable to policy changes.                                                                                                                                             

What is the background to the case?

The Renewables Obligation (RO) has been the main method by which the UK government has subsidised large-scale renewable energy generation since 2002.

On 13 May 2014, the Department of Energy and Climate Change (DECC) published a consultation announcing its intention to close the RO to solar photovoltaic (PV) projects over 5 megawatt peak (MWp) in size, with effect from 31 March 2015. The government confirmed the closure in October 2014 and the Renewables Obligation Closure (Amendment) Order 2015 was passed.

The claimants carry on business building solar PV systems (solar farms) and challenged the legality of the decision to bring forward the closure of the scheme. Many large-scale solar installations take over a year to go from inception to accreditation and developers working on projects over 5MWp stood little hope of completing their installations by 31 March 2015 once the consultation was published.

A judicial review of the decision was issued in the High Court on 1 August 2014. On 7 November 2014, Mr Justice Green dismissed the application. Permission to appeal was subsequently granted by Rt. Hon. Lord Justice Bean of the Court of Appeal.  

What were the key issues?

The decision to close the RO for 5MW+ projects was challenged on four grounds:

  • the decision to implement an early closure of the RO scheme by statutory instrument, as per the power granted by the Electricity Act 1989, ss 32LA and 32LB, was ultra vires because the statutory power was for the purpose of preserving the 2017 closure date and not for extending it;
  • the pre-legislative statements that the RO scheme would run until 2017 amounted to the type of assurance which would bind the executive, and early closure violated those assurances;
  • the statements made by the government from 2010 onwards that the scheme would not close before 2017 were clear and unequivocal representations giving rise to a legitimate expectation which was not thwarted by any policy consideration; and
  • the deadline imposed to fall within a one year Grace Period was retrospective in effect and therefore unfair in a public law sense.                                                     

What was the decision?

    • The Court of Appeal held that there was no reason to believe that Parliament had intended to stop the minister from closing the scheme before 1 April 2017. Under the Electricity Act 1989, s 32LA the minister had a power to close the scheme to ‘to electricity generated after a specified date’.
    • The government had not undertaken that the RO would be immune from the changes it underwent by way of the May 2014 announcement. The minister stated that the closure was planned for 31 March 2017, not that there were no circumstances in which the scheme could be closed earlier.
    • The Court of Appeal rejected the suggestions that the grace periods were the subject of retrospective legislation, and that the use of the legislation to enact them was unfair in a public law sense.                   

What are the implications of the case?

Together with some of DECC’s other decisions, this judgment is likely to result in reduced investment in large-scale renewable energy projects.

The ruling endorses DECC’s use of the Levy Control Framework (LCF) as a means through which to create inconsistent, unpredictable policy and will damage investor confidence in support mechanisms similar to the RO.

In July 2015 DECC announced its intention to extend the LCF past 2020, arguing it would continue to form ‘a basis for electricity investment into the next decade’. Nevertheless, the Court of Appeal has allowed DECC to go back on such promises, and the renewables market is unlikely to take much comfort from DECC’s announcements going forward.

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

For a PDF of this blog click here

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CASE CONCERNING RENEWABLES OBLIGATION SCHEME FOR LARGE SCALE SOLAR COMES INTO THE UK COURT OF APPEAL ON 2 FEBRUARY

This article is intended to provide a summary of the background to and issues at stake in the case of Solar Century Holdings Limited, Lark Energy & Others versus the Secretary of State for Energy and Climate Change in which Prospect Law represents the appellant solar companies. The case is due to be heard by the Court of Appeal on 2 February 2016 and, whichever way the judgment goes, it is likely to have implications for the conduct of UK government policy relating to subsidy schemes for renewable energy installations and for the future of the UK’s solar industry.

The History of the Case

1. This appeal concerns a Government subsidy scheme, the Renewables Obligation (“RO”) for incentivising large scale renewable electricity generation, including solar PV
(photovoltaic) projects, in the UK. Under this scheme qualifying projects are granted certificates (“ROCs”) which are sold to generate income in addition to the sale price of the electricity.

2. The appellants are all UK solar industry businesses developing solar PV projects in the UK that would ordinarily be supported by the RO Scheme.

3. On 13 May 2014 the Department of Energy and Climate Change (“DECC”) released a consultation paper which proposed to close the RO to solar PV projects over 5MW in size (“large-scale solar”) on 31 March 2015. Before this consultation the scheme was due to close to all projects on 31 March 2017 – i.e. the proposal was to close the scheme for large-scale solar 2 years early.

4. The main controversy of this consultation was that the notice given was unreasonably short (9 months from the consultation – where most large-scale solar projects have a longer development time than this), and that only projects that met certain arbitrary ‘grace period’criteria as of the date of the consultation would get extra time to deliver. Any new legislation introducing such a closure (following the Government decision on the issue, which came out on 2 October 2014 – 6 months before the closure) would have a back-dated effect on projects (i.e. would have a retrospective effect).

5. Owing to the potentially substantial investment at risk on projects already under development the appellants issued a claim for Judicial Review challenging the legality of the consultation.

The Decision of the High Court

6. The Judicial Review was heard before Mr Justice Green in the High Court in June 2014, with the decision of the Court released in November 2014 ([2014] EWHC 3677 (Admin)).

7. The Judge granted permission for the Judicial Review to be heard, but dismissed the application. The Judge acknowledged the “need for operators to have a secure and stable legal and investment environment in which to plan”, that “projects can involve a significant lead time from first investment to accreditation” and that “clear and repeated representations were made by Government to the effect that the scheme would remain in place until 2017”.

8. Nevertheless, the Judge also ruled that the Levy Control Framework (“LCF”), the Government’s self-imposed cap on funding for renewable energy schemes, “acts as an all pervasive proviso or caveat to any exercise of the statutory power” and that whilst the proposed changes included “a degree of retrospectivity” this was fair in the circumstances.

9. The over-arching rationale being, put simply, that the Government’s justification of defending the LCF cap levels was important enough to make the approach of the Government lawful.

10. The appellants do not agree with this, and have appealed this decision.

The Points on Appeal

11. Permission to appeal was granted by Lord Justice Bean of the Court of Appeal in early 2015.

12. The appellants’ main argument is that the LCF clearly states that investor confidence is paramount to the operating of renewables subsidy schemes and that retrospective changes will not be made to such schemes. With such statements and assurances clearly set out in the LCF it is difficult to believe that the LCF should be interpreted in the solar development and investment community as “an all pervasive proviso”.

13. There are also arguments in relation to the purpose of the legislation introduced to allow the closure of the RO and that the test for the lawfulness of retrospectivity in secondary legislation (i.e. a statutory instrument) is not whether such changes are ‘fair’, but whether the Secretary of State has the power to make such retrospective changes.

14. The appeal is due to be heard by the Court of Appeal on 2 February 2016.

The Wider Implications

15. We have already seen further DECC consultations with similar retrospectivity in relation to (1) further changes to support under the RO and (2) changes to the Feed-in Tariff (“FIT”) scheme, a sister scheme to the RO that support smaller renewables projects. In each changes are proposed, usually at short notice, with some aspects to take effect from the date of the consultation, not the date of the new legislation, all justified by seeking to protect the self-imposed LCF caps. These ‘consultations’ force those in the renewables sector to take action on the basis of these consultations as if they are final decisions. According to the latest Ernst and Young Renewable Energy Country Attractiveness Index reports, this is very damaging to investor confidence in the UK market.

16. If it is held that budgetary concerns override legitimate expectations, protection from retrospectivity and other such concepts that investors rely upon to allow them to make investment decisions, then the implications could extend even further than just the renewable energy industry.

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

For a PDF of this blog click here

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CHANGES ON THE HORIZON FOR UK SOLAR PART 2:

This is the second of three articles by Adam Payne which are intended to summarise the recent overhaul of the mechanics that have structured government support for the UK solar industry in recent years.

In the previous article I outlined how changes to subsidy support for the UK solar industry may undermine the fundamentals of last month’s climate change summit in Paris. In this article I delve into the detail of the consultation outcome, and In my third article I will consider the long term future prospects of the UK solar market.

The long awaited outcome of the Government’s FIT consultation was released on 17th December 2015. The consultation, which commenced on 27th August 2015, set out to review the level of support offered by the FIT scheme.

The principle argument behind the review has stemmed from the success of solar deployment in the UK and the uptake of the Government’s subsidy schemes.

Solar deployment throughout the UK has rapidly developed over the past 5 years and the Government anticipates what it considers to be an unacceptable over spend on the levied scheme which, in turn, will be passed onto consumer energy bill prices.

The cost of the increase in consumer energy bills is widely debated. However, a conservative estimate would indicate a potential increase of approximately £7. This sum, and the 65% decrease in subsidy levels that has now been imposed by DECC, should perhaps be set against the potential value to the country of securing a clean and secure energy source for the long-term future and how this interplays with our commitments on climate change objectives, as well as the job security of 25,000 people who are, or have been until recently, directly associated with the UK solar industry.

The headline points of the consultation response might usefully be summarized as follows:

–           from 15th January 2016, the maximum overall budget for FITs will be reduced to a cap of £100m per annum across all technologies,

–           all new applications applying for FITs will be subject to a new system of caps,

–           new tariffs for solar outline 0.87p/kW for stand-alone projects, and

–           <10kW system installations will receive 4.39p/kW, down from the previous 12.03p/kW.

Under the new cap system, the Government has limited deployment to a certain number of installation sizes that could come forward per quarter. Provisions have been made for just 5 stand-alone projects to be eligible for FITs per quarter from Q1 2016 to Q1 2019.

One of the most significant changes to come out of the consultation was the decision to remove the ability to pre-accredit projects under the scheme. The rationale behind this development was again, it appears, to stem the then current strong deployment progress, but the move has been particularly detrimental to investor confidence since there is no longer any guarantee of obtaining accreditation.

To further confuse the industry the Government has now decided to reinstate the process of pre-accreditation from 8th February 2016 for solar projects larger than 50kW under the new caps. The validity period, i.e. the time in which the project must be built, energised and pre-accreditation converted to a ROO-FIT application (full accreditation), is only 6 months.

This is, in my view, an alarmingly narrow window of time bearing in mind the entire planning application and decision making process (and its inherent unpredictability, as well as expense), not to mention the 90 day turn around for ENA applications to Distribution Network Operators.

Developers across the country have since scrambled to get their pipelines completed.  As much as 3.9GW of solar was installed during 2015, eclipsing the previous record of 2.5GW  in 2014.

In the third and final article of the series, I will attempt to outline the direction in which the solar market could go in spite of the downturn in investment and investor confidence currently being experienced.

Adam Payne is a technical consultant for Prospect Energy Ltd. His background is predominately in solar deployment throughout the UK having worked on the development of 76MW of ground-mounted solar assets to date.

This blog is not intended to constitute legal advice. We accept no responsibility for loss or damage incurred as a result of reliance on its content.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

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CHANGES ON THE HORIZON FOR UK SOLAR PART I:

This is the first of three articles by Adam Payne which are intended to summarise the recent complete overhaul of the mechanics that have structured government support for the UK solar industry. Throughout the series, we will discuss the fallout from the Government’s Feed-in-Tariff consultation before finally anticipating the market’s longevity.

We start this series on the back of last month’s United Nations Climate Change summit in Paris. An array of environmentalists, political leaders and scientists assembled in the French capital representing the 195 attending nations. Mitigating global warming and becoming rapidly less dependent on fossil fuel consumption is clearly now the central challenge facing the international community. The ambitiousness of these targets will be key in achieving the Paris summit agreement as countries already suffering from long-term drought and sea-level rise call for the most aggressive targets to be set.

Solar deployment will no doubt play a crucial role in meeting targets. Yet the actions of the UK Government’s Department for Energy and Climate Change (DECC) seems to go against the objective of limiting long-term global warming to 2°C.

Drastic policy change, headed by DECC Secretary of State Amber Rudd, has left much of the solar industry confounded into rethinking its entire resource and capital expenditure beyond March FY16. The curtain has already been drawn on several well-known utility companies such as Mark Group and Climate Energy, with several more on the brink of closure as shattered investor confidence leads to a search for new markets. Meanwhile, the US Congress’s approval to extend the $1.14 trillion dollar tax credits deal has boosted the confidence and stock prices of US utility companies, drawing further questioning of the UK Government’s decision making processes on renewable energy policy.

Protective legislation and investments also continue to pour into the nuclear, oil and gas industries. Government figures suggest that tax breaks announced in 2015 for crude oil production in the North Sea will cost taxpayers a further £1.7bn by 2020. How much of a future do finite fuels have in an already saturated market? And why is the UK the only G7 country where such subsidies are actually increasing.

Everyone understands the importance of keeping energy bills low for “hard-working” households and businesses, but to justify the complete overhaul of subsidy mechanics for a technology set to be self-sufficient by 2020 seems surprising. Is jeopardising the livelihood of 20,000 employees in the solar sector really worth an average annual household saving of just £7? Drawing the curtain on a thriving industry with falling costs and improving technologies seems to undermine the whole objective of last month’s summit.

Our next article will break down the specifics of the FIT consultation outcome.

Adam Payne is a technical consultant for Prospect Energy Ltd. His background is predominantly in solar deployment throughout the UK having worked on the development of 76MWp of ground-mounted solar assets to date.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resources projects in the UK and internationally.

For a PDF of this blog click here

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FALL IN PUBLIC SUPPORT FOR FRACKING

The government are failing to win public support for Fracking, with surveys hinting at a sharp decline in public support despite efforts to create a market for Shale Gas.

YouGov and the University of Nottingham have studied public reactions to Fracking extensively since early 2012. The results of their latest survey, involving over 6,000 people, suggested that little more than one in ten people now support the technique. If its previous studies are to be believed, support for Fracking reached a high of nearly 40% in July 2013.

More correctly known as hydraulic fracturing, ‘Fracking’ involves pumping a mixture of chemicals and sand into rock fractures so as to extract gas and oil. The technique dates back to the 1940’s. In the UK, areas such as Nottingham, Derbyshire and parts of Leicestershire have long been known to have excellent potential for the extraction of shale gas.

In spite of this, ‘fracking’ has been suspended in the UK since 2011, when drilling in Blackpool was linked to minor earthquakes. Earlier this year, two planning applications, submitted by Cuadrilla, were also rejected by Lancashire County Council amidst vocal opposition, with the decision issued on the grounds that operations could cause auditory and visual pollution in a rural landscape. Opponents of Fracking also frequently contend that drilling has the potential to pollute drinking water.

Nonetheless, in recent years the government has appeared keen to change public perceptions; reducing the subsidies available for wind and solar energy whilst insisting that Fracking could be key to making the UK energy self-sufficient. Companies like Cuadrilla, GDF Suez and Ineos have recently been granted over 1000 miles of land to explore for potential fracking, whilst another 5000 square miles will be subject to consultation, given their proximity to protected areas.

Yet falling support has also been reported in research conducted by the Department for Energy and Climate Change (DECC), who interviewed over 2000 households in July and found a support rate of approximately 21%, 6% lower than in February last year. The DECC Public Attitudes Tracker seemed to suggest a public preference for wind and solar, finding that 75% of the public supported sources of renewable energy.

Although these results suggest they are facing an uphill struggle, DECC have made a clear commitment to Fracking; they have previously argued that it could contribute billions to the UK economy. As such, it would be surprising to see them give up their battle to convince the public right now.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resources projects in the UK and internationally.

For more information, please contact Edmund Robb on 07930 397531, or by email on: er@prospectlaw.co.uk.

For a PDF of this Blog click here

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RENEWABLES INDUSTRY NEWS – JUNE 2015

Onshore Wind – Closure of the RO early for Onshore Wind

In a written ministerial statement of 18 June, the Secretary of State for Energy and Climate Change Amber Rudd MP set forth the Government’s intentions to end subsidies for onshore wind. The statement sets out the department’s plans to introduce primary legislation to close the Renewables Obligation to onshore wind projects as of 1 April 2016 (a year earlier than planned), whilst leaving details of how the Contracts for Difference and the Feed-in Tariff schemes will be dealt with for a later announcement. Included in the statement was a mention of grace periods for projects that already have planning consent, an accepted grid connection offer, and evidence of land rights, albeit only for projects that had these in place as of 18 June 2015. This was followed up by debates in both the House of Commons and the House of Lords on 22 June indicating both that support under the Contracts for Difference and the Feed-in Tariff were also under review.

PEL Note: Given the manifesto commitment of the Conservatives in regards to onshore wind this will not have come as a shock to many, although to have an announcement with very little detail, but that sets the deadline for the grace period criteria to that day, is potentially damaging to investor confidence. The lack of detail confirming the FIT and CfD scheme is certainly disappointing, although in the House of Commons on 22 June Amber Rudd MP did say “I said in my statement that, in respect of contracts for difference, we would be implementing the terms of our manifesto.” This appears to be a clear indication that the CfD budget may exclude onshore wind. The fate of onshore wind under the feed-in tariff is still unknown, but the outlook is not good. Many stories are already circulating about possible legal challenges following this announcement.

PLL Note: Whilst Prospect Law does not often directly comment in this update, this announcement has led to a number of rumours of legal challenges appearing in the press, rumoured to being brought by parties ranging from the Scottish Government through to developers. Previous challenges against sudden and/or retrospective changes to the RO/FIT schemes have all been based on changes to be introduced by secondary legislation following the release of a consultation. The difference here is that the Government is proposing using primary legislation, passed directly by Parliament, to achieve its ends, which is likely more difficult to challenge owing to Parliamentary sovereignty. Whilst we have yet to look at this in great detail, given the devastation the statement alone has had on the sector, even before any firm proposals or draft legislation is put forward, the statement itself may be open to legal challenge as a ‘decision’, especially if the final legislation does not cover projects that have been shelved owing to the announcement. The possibility of applying for a declaration of incompatibility and taking the case to the European Court of Human Rights (as a breach of the right to peaceful enjoyment of possessions, contrary to Article 1 of the first protocol, as established in earlier challenges against unlawful changes to the subsidy schemes brought by us) as an arguable route to a claim for damages remains open to consideration, given that a mere declaration of incompatibility cannot be a suitable remedy for any financial losses incurred.

 

Onshore Wind – Changes to Planning Regime

In a further written ministerial statement of 18 June, the Secretary of State for Communities and Local Government Greg Clark MP set out the Government’s intentions to impose new requirements for local planning authorities to consider when determining applications for onshore wind developments. These proposals, which take effect from the date of the statement, require that consent only be given when the development is in an area identified on the local plan as being suitable for wind development and when the planning impacts have been fully addressed and it therefore has the backing of the local community. For applications already in the system only the requirement to have addressed the planning impacts and to have the backing of the community will be required.

PEL Note: This story was somewhat overshadowed by the announcement regarding subsidies, however it could be even more important for onshore wind developers. The details of the updated guidance have not been released, however whilst the requirement for councils to have agreed (and approved) areas for wind development could prove difficult this could give potential investors useful information before money is spent – assuming such areas do materialise on local plans. The real concern seems to be the obligation for the project to have ‘the backing of the local community’ and the uncertainty as to just how easy it may be for a small group of local opposition to torpedo a project. It is not unusual, even when all local concerns have been diligently addressed, for there to be a few people who just do not want the project to go ahead, and if these individuals are allowed to prevent development the industry could have a serious problem.

 

Contracts for Difference – Consultation Response re Negative Pricing Released

On 29 June DECC released the Government response to the 9 March 2015 consultation on updates to the standard CfD contract terms. Alongside this the commissioned report on the likelihood of negative pricing events is also published. Owing to the state aid requirement the proposals regarding negative pricing (i.e. not paying generators if there is a 6+ hour negative pricing period) will be implemented, but with a promise to engage with the industry further. The negative pricing report gives low estimates for the probability of such events, with a conservative estimate of 0.5% of generation given for a ‘high renewables’ scenario.

PEL Note: The main area of interest in this response is likely to be the negative pricing issue, with the rest being small technical changes. The addition of a clause to the CfD contract stating that payments will not be made on generation occurring during a 6+ hour adds a risk to CfD generators that is difficult to quantify and price, however the published report gives relatively good news on the magnitude of this risk. It is worth noting that energy storage, interconnectors between countries and an increase in smart grids (that may also back onto an increase in the number of electric cars on the road) will all have a mitigating effect on the negative pricing risk. Whilst energy storage and interconnector projects are expected to go forward as planned, any curtailment of this type of investment will lead to this risk increasing and so is worth monitoring.

 

Capacity Market – 2015 Auction Parameters Published

On 29 June DECC published the letter to National Grid setting the parameters for the 2016 Capacity Market auction. Derating factors for interconnectors are also given as the scheme opens up to bids from such installations. The letter also sets out the parameters of the first Transitional Arrangement auction, which specifically targets demand-side response bidders.

PEL Note: Aside from the introduction of interconnectors, the December 2015 Capacity Market auction looks as if it is going to be similar to the first carried out at the end of 2014.

 

For a PDF of the June 2015 update, click here

If you would like to find out more about any of the points raised in this newsletter please contact us at updates@prospectenergy.co.uk or call us on +44 (0)20 3427 5955.

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ONSHORE WIND SUPPORT UNDER THE RO TO END ON 1 APRIL 2016

 

The Department for Energy and Climate Change (DECC) has formally announced on its website its intention to close the Renewable Obligation (RO) to onshore wind projects as of 1 April 2016 – just over 9 months away.

This has been widely foreseen by the industry, and was the subject of a news post on Prospect’s site of 11 June 2015.

The DECC announcement (link below) does not give specifics, however it talks of grace periods for projects that have a grid connection agreement, planning consent and evidence of land rights.

This is very similar to the initial grace period offerings in the consultation to close the RO to large-scale solar PV generators published in May of last year, which were the subject of a Judicial Review (JR) challenge by a consortium of industry stakeholders in a case run by Prospect Law.  The JR challenge against the solar consultation is currently awaiting a hearing in the Court of Appeal.

We will know more when the consultation on this proposal is published, but it is fully expected that DECC will continue with its retrospective approach that any grace period requirements are met on the date the consultation is published, as was seen with both the May 2014 solar PV consultation and the December 2014 biomass conversion consultations. The legality of this approach remains highly controversial and subject to future legal rulings.

Prospect Law are speaking to a number of onshore wind industry stakeholders in relation to this latest announcement about possible court action by way of a JR challenge.

We will write more when the details become available.

https://www.gov.uk/government/news/changes-to-onshore-wind-subsidies-protect-investment-and-get-the-best-deal-for-bill-payers

For a PDF of this article, click here

For more information, please contact Edmund Robb on 07930 397531, or by email on: er@prospectlaw.co.uk.

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Stories linking DECC to RO cut for onshore wind

 

There have been reports in both the Financial Times and the Daily Telegraph over recent days (see the links below) that DECC is briefing on plans to remove the RO for onshore wind earlier than expected and possibly on 1st April 2016.

No official announcement has been made as yet and we will certainly watch the situation as it develops over the coming days, not least to observe whether DECC opts for a similar style of “consultation” and “grace period” for its onshore wind strategy which it passed through on ROs for large scale solar (and indeed for changes to the rules for biomass conversion in December 2014).

The large scale solar RO announcement was the subject of a Judicial Review challenge by Prospect Law acting on behalf of four solar companies in the High Court [2014] EWHC 3677 (Admin). The case is currently before the Court of Appeal and is due to be heard in the coming months.

http://www.ft.com/cms/s/0/71680764-09d9-11e5-a6a8-00144feabdc0.html#axzz3cfPqLnmb

http://www.telegraph.co.uk/news/earth/energy/renewableenergy/11641088/Wind-farm-subsidies-facing-the-axe.html

Introduction to Prospect Law and Prospect Energy

Prospect Law is an energy specialist law firm which is based in London and the Midlands of the UK. It is a sister company of Prospect Energy Ltd which is a technical consultancy company. The two firms provide advice on energy development projects and energy related litigation for clients in the UK and internationally.

For more information, please contact Edmund Robb on 07930 397531, or by email on: er@prospectlaw.co.uk.

 

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Updates to future Contracts for Difference (CfD) proposed by DECC – Negative Pricing

On 9 March 2015, the Department of Energy & Climate Change (DECC) published a consultation proposing a number of policy changes to the CfD contract and CfD regulations. This consultation closed on 20 April 2015 and a Government response is due in the summer of 2015. Any amendments adopted following the consultation are proposed to apply from the 2015 CfD round onwards, with no proposed effect on existing CfD contract holders. For this note we concentrate on the proposed changes relating to negative pricing.

Click here to download a full note