Bluefield Partners LLP, the Investment Adviser to the Bluefield Solar Income Fund Limited has made a statement following today’s publication of the Department of Energy and Climate Change (“DECC”)’s response to consultations launched this summer regarding changes to financial support for solar PV, outlining changes to the regulatory support for solar assets, including changes to the Renewable Obligation Scheme and Feed-in-Tariff accreditation; and a consultation on the level of banded support for new solar photovoltaic production under the Renewable Obligation Scheme.
The July Consultations were the Government’s response to the significant growth in the UK solar market over the past few years, which has seen the UK become the largest growth market in Europe since 2013. Whilst the changes announced will impact certain solar PV developments that are not yet installed or do not qualify for the Grace Period (as outlined below), they will have no impact on existing installed capacity of the BSIF portfolio; have no impact on the existing pipeline BSIF is currently evaluating; and create clarity around future Renewable Obligation Scheme and Feed-in-Tariff eligibility of new capacity until March 2017.
The response states that the Government will close the Renewable Obligation Scheme across Great Britain to new solar PV projects of 5MW and below, including additional capacity added to an existing accredited solar PV plant up to 5MW total installed capacity, which would mean that:
- for projects that meet the Grace Period eligibility requirements and are installed up to 31 March 2017, there will be no changes;
- projects that do not meet the Grace Period eligibility requirements, but which: 1) can evidence significant financial commitment prior to 22 July 2015; 2) meet all other current Renewable Obligation Scheme eligibility requirements; and 3) are accredited by 31 March 2017, will be eligible for the Renewable Obligation that applies as at the date of accreditation; and
- projects that cannot evidence significant financial commitment prior to 22 July 2015 or that are eligible for the specified grandfathering exception or the banding reduction exception, but which are accredited by 31 March 2016, will still be eligible for the RO that applies as at the date of accreditation, subject to the results of the Renewable Obligation Band Consultation.
All new installations applying for Feed-in-Tariffs on or after 15 January 2016 will be subject to a new system of caps from 8 February 2016. Pre-accreditation for Feed-in-Tariffs will be re-introduced from 8 February and all applications for pre-accreditation will be subject to the new deployment caps in the same way as applications for full accreditation.
To be eligible for the Grace Period, developers must meet one of the following:
- Preliminary accreditation under the Renewable Obligation was obtained for the station on or before 22 July 2015. The application for full accreditation must be on or before 31 March 2017.
- Demonstrate that significant financial commitments have been made on or before 22 July 2015 with the application for accreditation, which must be on or before 31 March 2017, providing:
- A grid connection offer and acceptance of that offer, both dated no later than 22 July 2015;
- A Director’s Certificate confirming ownership of the land, lease of the land, an option to lease or purchase the land, an agreement to lease the land or that the developer or a connected person is party to 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 valid 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;
- Demonstrate delays in the planned grid connection to the electricity grid due to factors outside developers’ control with the application for accreditation, which must be on or before 31 March 2017, providing:
- A grid connection agreement consisting of: a grid connection offer; acceptance of that offer; and a document from the network operator which estimated or set a date no later than 31 March 2016 for delivery of the connection;
- A written declaration by the generator that to the best of their knowledge, the generating station would have been commissioned no later than 31 March 2016 if the connection had been made on or before the estimated grid connection date; and
- A letter or email from the network operator confirming that the grid connection was made after the estimated grid connection date; and that in the network operator’s opinion, the failure to make the grid connection on or before the estimated grid connection date was not due to any breach of the grid connection agreement by the generator/developer.
The statement goes on to say that the Government continues to consider renewables to be a key part of the transition to a low-carbon economy and an essential part of the energy mix and believes the UK is making good progress towards the EU target of 15% final energy demand from renewables by 2020 and is committed to its aim of achieving 30% of electricity from renewable sources by 2020. The UK is on track to meet its next interim target of final average energy consumption from renewables, above the 6.3% in 2013/14, as reported in June 2015. DECC believes that progress on UK renewable electricity deployment has been strong and the pipeline of projects towards 2020 remains healthy. Government expects to meet the renewable energy target of at least 30% of electricity demand to be met by renewable sources. The measures set out in the Response are about protecting bill payers from unacceptable costs in the future and ensuring that support for renewables remains affordable.
BSIF : Bluefield Solar comments on DECC response to subsidy consultation