The Secretary of State for Energy and Climate Change, the Rt.Hon. Amber Rudd MP has today confirmed the Government's intention to close the Renewables Obligation scheme for onshore wind a year earlier than previously expected. This move has been forecast in the media in recent weeks.
The industry body RenewableUK has threatened possible legal action against the Government in respect of this change, citing a successful action fought on behalf of the solar PV industry several years ago against a similar early closure of schemes of support in relation to that technology.
The Renewables Obligation (or"ROC") scheme operates as the main element of Government support for renewable energy installations across a range of technologies with a generation capacity of above 5MW. The ROC scheme operates in tandem with the Feed-In Tariff scheme, which operates for projects below the 5MW threshold.
The ROC scheme was due to close to new applicants on 31 March 2017, to be replaced by the"Contracts for Difference" (or"CfD") scheme. Last year saw the first round of auction bids by developers seeking support under the new CfD regime, with several projects missing out on Government offers of support following the reverse-auction process.
The Government's announcement today is that ROC scheme will close to new applicants a year early. The last date for projects to apply for support under the ROC scheme is now to be 31 March 2016. The Government have confirmed a grace period will apply to benefit ROC projects which already have planning permission, grid connection, and evidence of land rights. It is estimated that applications for as many as 3,000 turbines across the UK are awaiting the outcome of a planning application – projects which may now have to compete for CfD support against similar projects.
Support for 5MW+ schemes will continue to be available through the CfD regime. A Government-led consultation exercise is expected this year regarding the Feed-In Tariff available for below-5MW schemes.
It is forecast that this announcement will create a rush for projects to seek support under the ROC scheme from OFGEM before the scheme closes in March 2016. For projects in this position, contractual and technical exercises will require to be prioritised and accelerated in order to obtain ROC support. The increased developer risk presented by the CfD scheme presents a sizeable commercial incentive for schemes to complete the ROC registration process before 31 March 2016.
We would be happy to talk through any aspect of today's Government announcement, or how this may affect your scheme.
We will follow up this post with further news – in relation to other technologies besides onshore wind - in the coming weeks."
DECC press release: