Government consultation on changes to renewable subsidies for solar PV

The Government has today [22 July 2015] launched consultations on changes to both the Renewables Obligation and Feed in Tariff schemes, which may impact projects you are currently working on.

Key proposed changes

• Closure of Renewables Obligation (“RO”) to solar PV projects with a capacity of 5MW and below from April 2016
• Extension of Significant Financial Decisions Grace Period under the RO for solar PV with a capacity of 5MW and below – deadline for evidence is to be in place today
• Removal of preliminary accreditation under Feed in Tariff scheme

Changes to Renewables Obligation

The Government has today launched a consultation on the following changes to the support for solar PV projects with a capacity of 5MW and below under the RO scheme. The consultation document is here. (There is also a consultation on support for biomass conversion and co-firing projects under the RO, but this is not covered in this note.)

The key proposals are:

1. The early closure of the RO to small and medium scale solar PV projects with a capacity of 5MW or below from 1 April 2016. The intention is that this will apply to both new stations and additional capacity being added to existing stations.
2. The removal of grandfathering for solar PV projects that are not accredited under the RO as at 22 July 2015. However, the consultation indicates that where a project is successful in obtaining a significant financial commitments grace period (discussed further below) the benefit of grandfathering shall continue to apply to the project. It appears from the consultation that a project receiving another grace period (other than the significant financial commitment grace period) will not attract the benefit of grandfathering.
3. Revisions to the proposed banding for new solar PV projects with a capacity of 5MW or below – these are awaiting publication.

Grace periods

The government proposes that the early closure to small and medium scale solar will be subject to the same grace periods as those which applied to the closure of the RO to large solar (above 5MW), as set out in The Renewables Obligation Closure (Amendment) Order 2015.

In particular, paragraphs 25 and 33 of today’s consultation state that a 12 month grace period will be available (and the removal of grandfathering rights will not apply) to projects that can demonstrate significant financial commitments on or before 22 July 2015.

The consultation provides that the following evidence should be provided to Ofgem (with the application for accreditation, which must be made on or before 31 March 2017) to demonstrate that significant financial commitments have been made on or before 22 July 2015:

• a grid connection offer and acceptance of that offer, both dated no later than 22 July 2015;
• a Director’s Certificate confirming one of the following:
  • a lease of the land,an option to lease or purchase the land,
  • an agreement to lease the land, or
  • an exclusivity agreement in relation to the land,

as of and no later than 22 July 2015 by the developer or proposed operator of the station; and

• confirmation that a planning application had been received by the relevant planning authority in respect of the project no later than 22 July 2015 or a declaration that planning permission is not required.

Changes to the Feed in Tariff (“FiT”)

The Government has also announced an intention to remove preliminary accreditation from the FiT scheme. It is envisaged from the consultation, which can be accessed here, that this will apply to all FiT eligible projects. However, the government recognises that preliminary accreditation may be reintroduced for community projects and projects run by other similar group.

Note that both the RO and FIT publications are consultations only and therefore the proposals will depend on the final legislation, if enacted.

Next steps

Please do not hesitate to contact us if you wish to discuss the above consultation and possible implications for your proposed projects, or if you require assistance in putting in place the requisite documents to enable you to make an application for the significant financial commitments grace period referred to above.