The War on Renewables?

It is safe to say that the recent budget announced by Chancellor George Osborne came as something of a shock to the clean energy industry. Already reeling after the sudden early closure of the renewable obligation (ROC) regime subsidy in Great Britain, owners and developers of wind farms and other renewables were disappointed to learn on the 8th of July that the subsidy provided through the climate change levy tax scheme would also now be closed.

As a result, generators of clean energy will no longer receive levy exemption certificates (known as LECs) to supplement their income. PWC estimates that levy exemption certificates are worth around 5% of the income of a typical wind farm each year. This loss will likely be felt hardest by wind farms which are already operational.

In addition to this, DETI has just released a consultation on the early closure of the ROC regime in Northern Ireland in line with the position in Great Britain. This is despite previous assurances from Minister Jonathan Bell that the Assembly would continue to support ROCs for on-shore wind up to 2017.

The current consultation, which closed on 14 October 2015, proposed ending the Northern Ireland ROC regime to proposed new on-shore wind farms with effect from 1 April 2016. Wind farms which held the necessary planning and grid consents on 30 September 2015 however will still be eligible for ROCs up until 31 March 2017. There is also a proposed 12 month "grace period" for projects which are delayed waiting on grid connection.

ROCs can make up approximately 50% of the income of a typical wind farm each year. As such, this change in policy will likely have a significant impact on the viability of undeveloped wind farms and will put pressure on projects currently in development to complete construction on time to qualify for ROCs. Michael Doran at Action Renewables has predicted the loss of up to 10,000 jobs in Northern Ireland as a result of the ROC closure. How the industry responds to the latest cuts remains to be seen.

Date Published: 27 October 2015