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JORDAN INVITES EXPRESSIONS OF INTEREST FOR SOLAR AND WIND SITES

The Government of Jordan is seeking expressions of interest from qualified developers with in-depth experience in IPP/BOO schemes interested in investment in renewable energy projects for power generation on a build, own and operate (BOO) basis.

The Government wishes to develop 200MW of solar PV on a designated site in the Ma’an area with a project size of 50 MW and wishes to develop 100 MW wind to be located in the southern part of Jordan with a project size of 50MW. MEMR is also considering battery storage options for both solar PV and wind. Developers are invited to express interest in developing only one type of renewable energy source and technology (wind or solar only).

We have been involved in the development of power projects in Jordan for many years and would be happy to discuss this tender with any party that is interested in bidding for it. For further information please contact Edward de la Billiere on edlb@prospectlaw.co.uk

Prospect Law and Prospect Advisory provide legal and business consultancy services for clients involved in the infrastructure, energy and financial sectors.

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SUBSIDIES UNDER ATTACK? APPARENT RISE IN SHORT TERM OFGEM AUDITS

Since the fundamental changes to the Feed-in Tariff that have been introduced over the last 6 months it would appear that OFGEM has now moved its focus onto existing members of the scheme. We have noticed a significant increase in the number of OFGEM audits in the last few months investigating generating stations with existing full accreditation under the scheme, in many cases to be carried out by consultants Black & Veatch.

These audits look to be comprehensive, and investigate all aspects of the generating station’s compliance with the underlying requirements of the FIT scheme, including the specifics of commissioning, the ‘site’ of the generating station, the metering arrangements and the information provided in support of the accreditation application.

We have seen such audits issued to a variety of technologies, including Solar PV, Onshore Wind, Anaerobic Digestion and Hydro and across a wide range of installation sizes, so it would appear that this round of audits is extensive.

The audit letters request the provision of detailed information and documents prior to the date of the audit, and are often requested at short notice.  These requests may prove problematic for generating stations that have, since commissioning and accreditation, been sold on to long term investors who were not necessarily involved in the initial development and construction phase. We are working closely with our clients to assist in responding to these OFGEM audit requests.

Given the perceived assault on renewable energy schemes over the past few years there is a feeling in the industry that now that entry into the FIT scheme has been significantly reduced the Government is seeking further savings by looking for generating stations to remove from the scheme on technicalities, and this is causing a level of anxiety for some holding renewable generation assets. Where it was once the view that, having achieved full accreditation, an investment was safe, this feeling of long term security is currently under threat.

It is hoped by many that these audits are simply looking for obvious abusers of the scheme, however given the history of the renewables obligation and FIT schemes there is certainly a fear that this is an attempt to remove as many as possible from the scheme.  The underlying rationale for these audits will become apparent in time, however we would be surprised if at least a few of these audit outcomes did not end up before the courts.

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.

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.

This article remains the copyright property of Prospect Law and Prospect Energy 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 Energy.

For more information please contact Jonathan Green on 01332 818 785 or by email on: jng@prospectlaw.co.uk

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SAUDI ARABIA INVITES EXPRESSIONS OF INTEREST FOR DEVELOPMENT OF TWO 50MW PV FARMS

The state owned Saudi Arabian electricity company has announced two tenders for the development of PV farms, each one to be 50Mw.

Although the contracts are sizeable, the announcement marks a significant scaling back of the Kingdom’s original plan to develop 41,000 megawatts. Whereas early targets reached 50%, Renewable sources are now only expected to account for about 10% of the Kingdom’s total power capacity. However, even this represents a large development programme still thought to be 9,500Mw. The Kingdom is now expecting that an increased output of natural gas will help cut its reliance on crude oil.

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.

We have been involved in the development of both nuclear and renewable power in the Kingdom for many years and would be happy to discuss this tender with any party that is interested in bidding for it. For further information please contact Edward de la Billiere on edlb@prospectlaw.co.uk

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SOLAR POWER IN THE MIDDLE EAST AND NORTH AFRICA: WHAT FUTURE DOES IT HAVE? PART II

A recent article by Stratfor, A Bright Future for Solar Power in the Middle East, assessed the future of solar power in the Middle East and North Africa, and offered guidance to those seeking to invest in the market. We have been following the development of the PV sector in the region and agree with much of Stratfor’s comment. With permission, we have published some of their main points below, adding our own views.

To read Part I, which assessed the future of Solar Power in Jordan, Egypt and Morocco, click here.

Saudi Arabia

Saudi Arabia relies on oil for electricity production, and it faces rising domestic demand for electricity at a time when low oil prices have put significant financial strain on the government. Its domestic fuel consumption is following an unsustainable trend and the need to wean itself off oil is ever growing.

Under current goals, renewables would account for 8 percent of electricity production by 2020 and 15 percent by 2030, with solar power accounting for the majority of that increase. In the past, however, Saudi Arabia has lengthened the timelines for such targets. The Kingdom also has ambitious nuclear energy plans, which we have been involved in, and aims to remain an ‘energy exporter’ post oil by developing and then exporting its own solar and nuclear technologies.

Saudi company ACWA Power is involved in multiple projects in the region (Morocco and Jordan) and farther away (South Africa and Turkey). ACWA Power has gained a regional reputation as having sufficient economies of scale to underbid other major solar power firms, mostly Western or East Asian companies. This helped ACWA Power win large bids such as the first phase of Morocco’s Noor plant and the Mohammed bin Rashid solar park in the United Arab Emirates. Saudi Arabian Oil Co., the national oil company, has even expressed interest in developing solar export capability. There are also plans to add solar technology production facilities.

The United Arab Emirates

The UAE, meanwhile, has positioned itself as a renewable energy financier and development hub. It is the home of the International Renewable Energy Agency, and hosts important conferences focused on both renewable and non-renewable energy. Furthermore, it has used its ample hydrocarbon largesse to develop unique large and small-scale renewable projects in ways that less resource-rich countries such as Morocco, Jordan and Egypt cannot match. The United Arab Emirates has established itself as a regional leader in solar power in part because of its greater ability to adopt the technology (both domestically and through partnerships with other countries) and to fund projects throughout the world. Masdar, the country’s renewable energy arm, is connected with the Mubadala Development Co., one of the country’s smaller sovereign wealth funds. Masdar is involved in projects throughout the Middle East, Africa, South America and Europe and on islands in the Pacific.

The UAE has shown a similar aptitude for new technologies and flexibility in working with international partners to have the foremost nuclear energy programme in the region, with the first nuclear power station due to commence generation this year, although a delay is looking likely.

Algeria

Algeria is a leading natural gas producer, and has ambitious plans to follow a similar path with solar energy. Renewable power installations totalling 22 gigawatts of capacity — 13 gigawatts of that solar — are proposed to go online by 2030. That is enough power to meet nearly a quarter of domestic needs while still reserving a significant portion for exports. However, the issue of insufficient energy storage, which is a barrier to incorporating large amounts of variable renewable power worldwide, will require substantial research and investment first. Energy storage is a major issue that we have advised on but which is yet to be cracked.

Algeria will require foreign investment and cooperation to meet its grand plans. While Algeria is more stable than some of its neighbours, such as Libya, its government is in a slow leadership transition and the risk of instability caused by protests relating to development and distribution of energy resources is high. Nonetheless, the country has made strides toward attracting the necessary investment to build out its solar capacity. With over 250 megawatts of capacity installed in 2015 and work occurring at additional sites in 2016, Algeria is moving toward its target of 15 percent of electricity being generated by solar by 2020.

Summary

Overall the region will undoubtedly install more renewable energy installations in the coming years. However, there are and will continue to be concerns for those wanting to build, own and operate systems in the region. There are lesser risks for those supplying renewable technologies and those seeking to operate purely as EPC contractors, particularly with the involvement of the World Bank in countries such as Jordan.

Introduction to Prospect Energy and Prospect Law

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. 

This article remains the copyright property of Prospect Law and Prospect Energy 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 Energy.

For more information please contact Edward de la Billiere on 01332 818 785 or by email on: edlb@prospectlaw.co.uk.

For a PDF of this blog click here

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SOLAR POWER IN THE MIDDLE EAST AND NORTH AFRICA: WHAT FUTURE DOES IT HAVE? PART I

A recent article by Stratfor, A Bright Future for Solar Power in the Middle East, assessed the future of solar power in the Middle East and North Africa, and offered guidance to those seeking to invest in the market. We have been following the development of the PV sector in the region and agree with much of Stratfor’s comment. With permission, we have published some of their main points below, adding our own views.

Summary
The Middle East might seem like a natural hotspot for solar energy. However, despite good sunlight levels, many obstacles continue to prevent widespread deployment, including natural issues (the effect of sand on solar panels), political stability and land rights.

Jordan
Jordan imports 92% of its energy, and energy imports account for around 16% of the nation’s GDP.

In 2011 and 2012, disruptions to natural gas supplies from Egypt caused Jordan to deplete its energy reserves entirely. The problem arose again in 2013, when oil imports from Iraq were interrupted. Uncertain energy supplies have the potential to stoke unrest in Jordan, where energy costs are heavily subsidized by the monarchy. After all, an erratic domestic electricity supply has aggravated social upheaval in nearby Lebanon, Iraq and Egypt.

Jordan aims to produce 20% of its energy from renewables by 2018, and we have advised on plans to develop nuclear power stations. Numerous solar projects, large and small, are underway, ranging from panels on the rooftops of homes to large solar parks with 200-megawatt capacities. Jordan has simplified the bidding process for renewable energy projects, attracting companies from around the world in the process. The European Bank for Reconstruction and Development is actively involved in supporting Jordan’s renewables programme and Public private partnerships will be required to help achieve the nation’s targets.

Egypt
The threat of social unrest in Egypt is more potent than in many other countries in the region. Its massive population creates an enormous energy demand, which may strain the government’s budget but also open up opportunities to invest in technologies to meet the growing need.

President Abdel Fattah al-Sisi’s reforms have attracted renewed investment in the natural gas sector, with projects such as Eni’s Zohr natural gas field being fast-tracked.

Improved natural gas production might help achieve a more consistent supply of electricity, but with demand expected to climb, there is room for additional forms of power generation. Recent agreements with Japan and South Korea to develop solar power and associated projects indicate that Egypt is looking beyond traditional relationships to further the renewables energy sector, though regional players such as Saudi Arabia and the United Arab Emirates are still active investors and there is continued interest from Europe.

Morocco
Morocco imports most of its energy — about 90 percent. The relatively stable nation is also looking to renewables, especially solar power, to create a cheaper, more secure energy supply. Morocco has set a lofty goal: to have renewables account for half its electricity production by 2025 (solar would satisfy about a third of the demand), and the nation even aims to become an electricity exporter.

But Morocco is taking the idea a step further by building the world’s largest power plant using concentrated solar technology. The first phase of the project, the Noor Solar Complex near the city of Ouarzazate, opened earlier this year.

Of course, Morocco’s projects will inevitably require large tenders and international investment, rather than participation from domestic companies.

Introduction to Prospect Energy and Prospect Law

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.

This article remains the copyright property of Prospect Law and Prospect Energy 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 Energy.

For more information please contact Edward de la Billiere on 01332 818 785 or by email on: edlb@prospectlaw.co.uk.

Part II will assess the future of solar power in Algeria, Saudi Arabia and the UAE.

For a PDF of this blog click here

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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.

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NEW SUPPORT FOR SOLAR FUELS GROWTH IN FOREIGN MARKETS

Whilst the true fallout from U.K. Governments FiT cuts is yet to rear its ugly head, capital investors and developers plan their next move into new foreign markets.

During the recent COP21 summit, India was heavily criticised for its part in being the third largest CO2 emitting country out of the 195 attendees. Bringing light to 100% of its 1.27billion population, whilst modernising its manufacturing economy; that for years has been driven by domestic coal reserves, has been the harsh reality facing Prime Minister Narendra Modi since entering office in May 2014. India is also faced with developing its electrical infrastructure, by making available an additional 15GW of electricity per annum over the next 30 years to keep up with expected demand.

One of the largest clean energy sources forecast to rid India of its coal consumption is solar energy. The Indian Government have recently unveiled their desire to implement 100GW of solar capacity by April 2022. Well established industry players like SunEdison, who recently withdrew its presence in the U.K., leading to the administration of Leicester based Mark Group, are already well established within the Indian solar market. India had already installed approximately 4.68GW of solar power capacity at the end of 2015. The recent announcement of a new $770million subsidy support scheme for rooftop solar will also certainly aid India in achieving its goals.

Across the pond, U.S. Congress have also passed the final bill extending Investment Tax Credits (ITC) for solar until 2022. The credit which is currently set at 30% of the value of a project, has been extended for both commercial and domestic installations at its current level through 2019 before falling to 10% by 2022. This announcement was most welcomed by developers rushing to complete their projects and qualify for the support scheme, which was set to end later this year. After 2022, these tax credits will no longer be available to domestic installations, but will remain at 10% for commercial installations.

As panel prices continue to fall, new tax break provisions are anticipated to give rise to $1.25 trillion of additional capital. Developers will continue to extend their market presence in states that have not yet exploited their full solar potential. These funds will continue to improve the technology across the board. Deployment figures show that 7.4GW were installed in 2015, eclipsing the 6.3GW record set in 2014. Yet leading electricity market analyst GTM Research anticipates 2016 to reach new heights by installing more than double with approximately 15.4GW of new capacity coming online. Figures released by The Solar Foundation also align with these trends, with employment within the sector soaring by approximately 125% since 2010. One in every eighty-three jobs created in the U.S. over the last 12 months was associated with the solar industry, taking the total to a staggering 210,000 employees. The extension to the tax credits is estimated to take these employment figures to over 420,000 by 2020.

Solar deployment looks set to take its next step in some of the world’s largest and advancing economies on the back of new commitments following the COP21 summit. Will the U.K. miss out on this prime opportunity to exploit its abundance of natural clean-energy resources?

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 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.

This article remains the copyright property of Prospect Law and Prospect Energy 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 Energy.

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CHANGES ON THE HORIZON FOR UK SOLAR PART III: A BRIGHTER FUTURE?

This is the last of a series of articles covering the recent overhaul of the mechanics that previously structured government support for the UK solar industry. I previously examined the outcome of the FIT Consultation. My final article examines the future direction the SOLAR industry could take.

A recent paper by the Institution of Mechanical Engineers projected a significant 55% shortfall in meeting the UK’s energy demand should Amber Rudd successfully decommission the remaining fleet of UK coal power stations by 2025. Besides bolstering the clear need for an incentivised renewables framework, the paper also calls for the UK to take full advantage of its natural resources suited to clean energy sources. So, why stop now?

A large part of the apparent logic behind the cuts appears to be the progress made in transitioning to a low-carbon source economy. The UK has been set the EU target of 15% of energy demand from renewable sources by 2020. Figures released in June 2015 highlight that 6.3% of the resource for 2013/14 came from such sources, well above the target of 5.4%. Yet what the government does not appear to accept is that this strong deployment progress will not continue.

The time of securing the low hanging fruit of 5MW+ of capacity on distribution networks has gone. Network Operators are currently inundated with ENA applications for new generating projects that will struggle to secure a connection by the March 31st deadline. Small pockets of capacity remain in some areas of the country, but in most areas capacity is extremely limited, with some applicants joining interactive queues with 20+ participants.

The rolling improvement of the UK’s electrical infrastructure is not, it seems, matching the demand from new connection projects, a consideration which may have been overlooked during the Government’s FIT Consultation.

Several UK solar developers have now shifted their attention towards projects in Scotland. Devolved energy policies have meant that levels of previous support in England and Wales are still applicable across the border.

Once dominated by large wind farms, screening applications to local authorities and applications to SP Energy Networks for solar project works have spiked on an unprecedented level. Areas such as Fife and Midlothian, which have not been as high on wind farm developers’ radars, have potential for commercial scale solar developers.

The structure of SP Energy’s network is also relatively robust compared to network operators further south, allowing as much as 10MW in some cases to be exported onto their cheaper 11kV network.

The falling cost of solar installations, coupled with suitable export capacities for reasonably sized projects has allowed developers to work around more healthy IRRs, despite lower PV irradiance scores north of the border.

ESB Networks, the licensed distribution network operator in the Republic of Ireland, have also received over 1.2GW of solar applications as developers gear up for the release of the brand new support framework in the coming months. The exact level of support has not yet been quantified, but Ireland’s Department of Communications, Energy and Natural Resources new version of the previous REFIT schemes will incorporate both domestic and ground-mounted solar deployment.

KPMG have recommended €67/MWh (5p/kWh) for commercial scale, diminishing to €12/MWh (0.01p/kWh) by 2023 and entirely removed by 2030.

Meeting the demand for the UK’s ever increasingly extensive energy culture is not without its challenges, as I hope has been detailed over my three recent articles. What seems quite clear to me is the need to provide financially viable incentives where both developers and governments can prosper whilst securing long-term clean energy solutions and helping to meet associated climate change objectives.

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.

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.

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

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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