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UK: Update on closure of the Renewables Obligation

  • United Kingdom
  • Real estate
  • Energy and infrastructure - Clean energy


The Energy Bill currently addresses oil and gas issues, but also proposes the closure of the Renewables Obligation to new projects on 31 March 2016, twelve months earlier than previously committed.

Early closure of the RO was not a Conservative manifesto commitment, although the Government argues this point.

The Bill was introduced into the House of Lords in July 2015. Before and since then Eversheds has been actively working with industry trade bodies and others to promote amendments to the Bill in an attempt to rescue as much new capacity as possible. The differences between Government and the industry amount to nearly 300MW of onshore wind in the UK, with an approximate cost to the Levy Control Framework of £30m, although this figure may well be as low as £20m in the context of the overall budget.

The Bill has been through its Grand Committee stage in the Lords and its Third Reading. It is likely to be introduced into the Commons today and receive its First (unopposed) Reading. The Second Reading in the Commons is likely to take place after the 10-16 November 2015 recess, and will be followed by the Select Committee stage of the Bill in the Commons.

Since Parliament rises for Christmas on 17 December 2015 (returning 5 January) it may be that the Commons Committee stage will not be complete until after 5 January 2016. Timing is of concern to the Government because the Bill must return to Lords following the vote in that House to delete the RO early closure provision and Royal Assent must be reached by 16 March 2016, when this Parliamentary session ends.

The RO early closure clause will be reintroduced in the Commons, along (at some stage but the timing is uncertain) with the Government’s proposed grace period conditions allowing for projects to become accredited for RO purposes after 31 March 2016.

The Government’s grace period conditions allow for projects which receive planning permission by 18 June 2015, and which at the same date have land agreements and an accepted grid connection offer. The Government’s grace period conditions also envisage that projects which were refused before 18 June 2015 and which were subsequently allowed on appeal will count for the purposes of the RO. The Government also proposes to allow additional periods for grid delays which are not the fault of the developer, as it did for the early closure of the RO to solar projects.

Eversheds has put together a consolidated list of industry amendments to the Government's grace period conditions, covering such matters as variations of permissions granted before 18 June 2015, section 36 Electricity Act projects permitted before 18 June and a variety of other points, including on modified applications for grid connections.

Eversheds has worked with the Trade Associations and with IREGG over a period of months to achieve a united industry approach.

It is vital that in promoting projects developers, equity or debt providers and others with relevant interests should enquire whether or not the grace periods cover their projects. The team at Eversheds, led by Marcus Trinick QC, Iwan Walters, Jean-Pascal Boutin and Stephen Hill, will be happy to help you interpret the provisions of the Bill and to draft any further amendments which are essential for your purposes.

It is fair to say that the Government will fight hard to prevent any unanticipated additional capacity being accredited after 31 March 2016, beyond its grace period conditions and one or two additional amendments which it may accept as fair. Nevertheless, the old adage of "if you don’t ask you don’t get" applies with great force here.