Closure of the NIRO to small wind
After months of speculation the Northern Ireland Department of the Economy (the successor body to DETI) has confirmed today that the Northern Ireland Renewables Obligation scheme (the "NIRO") will close to new small wind farms on 30 June 2016.
The NIRO was closed last year to all forms of renewable generation, other than onshore wind. Earlier this year it was also closed to large onshore wind (over 5MW), however DETI (as it then was), chose to consult separately on the closure of the NIRO for small wind. The consultation finally closed on 9 May 2016 and a decision has been awaited ever since.
Implications for the industry
Technically today's decision relates only to the small wind sector, however the decision has wider implications for the Northern Ireland renewables industry.
Over the last few months there has been concern that the Department for Energy and Climate Change ("DECC") may utilise its powers under section 81 of the Energy Act 2016 to make certain NIROCs non-tradable in Great Britain. This would likely apply only to NIROCs produced by small wind farms which were allowed to accredit in Northern Ireland later than the NIRO closure date which DECC had initially requested.
If implemented, this decision would only affect a handful of small wind generators. Nevertheless, there was a general concern in the industry that this power may be misinterpreted by investors and that some may avoid investing in Northern Ireland projects for fear that the resulting NIROCs would no longer be tradable elsewhere in Great Britain. Likewise, there was a concern that some buyers of ROCs in Great Britain may choose to avoid buying NIROCs.
Accordingly it was felt that if DETI decided to keep the NIRO open past 30 June 2016 then this power may be utilised by DECC and the result may be to damage the long term value of NIROC for all new and existing projects.
Today's decision therefore should ease concerns around the future value of NIROCs and help provide some much needed certainty for the renewable industry generally into the final years of the scheme.
Terms of the closure
The decision provides that the NIRO will close to small wind on the following terms:
- Small wind developers now have certainty as to when the scheme closes, although some may have hoped for a later closure date.
- This means that developers of new small wind farms (sub 5MW) have until 30 June 2016 to accredit for NIROCs, after which they will no longer be eligible for NIROC support, unless a grace period applies.
- There are a number of grace periods which follow the large wind closure, including for "approved developments", grid and radar delay and also for investment freezing.
- These grace periods can extend the period for accreditation up to 31 March 2019 for projects which satisfy all of the above grace periods.
Conclusion
The decision today, while important for the small wind industry, has much wider implications and will be welcomed by the renewables industry generally. It also marks the last step in the closure of the NIRO. The big question facing the industry now is whether there will be any replacement support mechanism for new renewables projects.
Date Published: 27 June 2016