Renewables roundup
In this month’s update we consider the renewables industry’s reaction to the proposed swift cut to FITs for solar pv and the opportunities to be had from the Renewable Heat Incentive. We also provide a number of news items of interest to the industry
Welcome to the November issue of Anderson Strathern’s Renewables roundup.
Our roundup aims to keep you up to date with changes in the regulatory environment and new industry initiatives to support the drive for our low carbon future.
In this month’s update we consider the renewables industry’s reaction to the proposed swift cut to FITs for solar pv and the opportunities to be had from the Renewable Heat Incentive. We also provide a number of news items of interest to the industry.
Please click on the links below for quick access to the undernoted items
Anderson Strathern Projects
Anderson Strathern sponsors The Scottish Green Energy Awards
Policy
Pressure on Government mounts over solar pv fit
Renewable Heat Incentive open for applications
News
UK falls six places in energy investment rankings
Anderson Strathern Projects
Anderson Strathern sponsors The Scottish Green Energy Awards
The awards, in their tenth year, were established by Scottish Renewables to bring together industry leaders to honour, acknowledge and celebrate the contributions of individuals and organisations in the renewable energy industry in Scotland.
Ten award categories have been created to represent areas that are essential for the development and growth of the industry. They are also given to highlight the positive economic and environmental contribution that Scotland is making both nationally and internationally.
Bruce Farquhar, Head of the Renewable Energy team at Anderson Strathern, is a member of the judging panel tasked with the challenge of selecting this year’s winners.
Bruce comments:
“Anderson Strathern is a prominent player in Scotland’s renewable energy market. Our sponsorship of The Green Energy Awards is, therefore, a perfect fit.
The firm’s award winning work for The Crown Estate on the marine leasing rounds for the Pentland Firth and Orkney Waters, and its role in advising on the sale of Artemis Intelligent Power to Mitsubishi, are but a few of the recent innovative renewable energy projects, of national significance, in which the firm has played a key part.
Being a member of the judging panel is a great reminder of the huge leaps which the renewable energy sector has taken over recent times and a terrific showcase for the world leading projects and endeavours which are being deployed throughout Scotland ”.
Policy
Pressure on Government mounts over solar pv fit
The reaction of both the solar pv industry and green energy analysts to the proposed cut in solar pv feed-in-tariff has been one of chill and hostility. The scope and speed of the contraction has impacted tangibly on the development pipeline. Already there is news of several solar projects being mothballed due to the proposed cuts. In particular, the social housing sector, which was seen to be a central driver in investment in green technologies for the benefit of both their clients and the renewables industry, is reappraising its planned investments. The problem being that the cost of financing schemes is somewhere in the region of 4.75% and the anticipated return on investment under the changes proposed sits at around 4.5%. Manufacturers of solar pv panels such as Sharp Solar are also reappraising their investment strategies on the basis of the extent and timing of the review. In the manufacturing side, Sharp Solar has intimated to the government that it will need to reconsider a planned £30 million expansion to its factory in North Wales.
In recent days, and whilst not detracting from the justificatory drive for change, the DECC minister has hinted that a compromise may be reached in the days ahead.
Without some compromise, the government faces legal challenges from pv manufacturers and environmental pressure groups. The legal basis for the threatened attacks will be that the support is to be withdrawn within an unreasonable timeframe before the consultation period ends and both the public and investors have committed funds in the legitimate expectation that the price or return would be at a well publicised level.
Renewable Heat Incentive open for applications
The Renewable Heat Incentive (“RHI”) opened for applications from non-domestic generators on Monday, 28 November 2011.
The RHI is a fixed Government subsidy for heat produced from installed renewable sources. It provides a 20 year income stream to organisations installing eligible renewable heating systems, ensuring that renewable heat is commercially attractive when compared to fossil fuel alternatives.
The opening of the scheme to non-domestic applications is ‘phase one’ of the RHI. This phase is targeted at the non-domestic sector including businesses, charities, public bodies and industry.
A non-domestic installation could include one in anything from a pub to a public library, a swimming pool to a chemical plant. A district heating system (e.g. one boiler serving multiple homes) would also constitute a non-domestic installation.
The second phase of the RHI will see the scheme extended to include additional technologies as well as support for domestic installations. The exact timetable for introduction of phase two is likely to be confirmed early in 2012.
Eligible technologies for an application under ‘phase one’ include:
- Biomass boilers (Including CHP biomass boilers)
- Solar thermal
- Ground source heat pumps
- Water source heat pumps
- On-site biogas combustion
- Deep geothermal
- Energy from municipal solid waste
- Injection of biomethane into the grid.
Recipients will be paid up to 7.9p per kWh for biomass boilers, 8.5p per kWh for solar thermal and up to 4.5p per kWh for heat pumps.
Key aspects of the non-domestic phase of the RHI are:
- RHI payments will be claimed by, and paid to, the owner of the heat installation.
- Payments will be made quarterly over a 20-year period.
- Payments are calculated by multiplying the appropriate tariff, depending on the technology and size of the installation, by the metered amount of eligible renewable heat generated.
- Installations will require to be accredited by Ofgem to ensure that the eligibility criteria have been satisfied.
- Smaller scale installations (up to and including 45kWth) should use Microgeneration Certification Scheme (or equivalent) certified installers and equipment.
- Biomass installations of 1 MWth capacity and above will be required to report quarterly on the sustainability of their biomass feedstock for combustion.
- Eligible non-domestic installations, completed after 15 July 2009, but before the start of the RHI, can still be eligible for the RHI provided any grants received for the direct costs of the installation are repaid.
- Equipment installed after the RHI is in force, and in receipt of a grant, cannot benefit from the RHI; grants cannot be repaid and followed up by an application for RHI.
The Chancellor has announced in his Autumn statement that there will be £200 million to support the scheme in its initial stages.
The scheme is being administered by Ofgem and further guidance on eligibility, tariff levels and details of how to apply are available on its website accessible here.
News
The Environment Agency has published the Performance League Table which shows the performance of participants under the Carbon Reduction Commitment Energy Efficiency Scheme (the CRC). The table ranks 2,000 organisations according to how they manage their energy use.
According to the table, 60% of participants have taken steps to improve their energy management, including installing smart meters or gaining good energy management certification (e.g. from the Carbon Trust). However 40% of organisations came in at the bottom of the table with a score of zero – with the Department of Energy and Climate stating those firms haven’t taken any action to improve energy use.
The CRC league table is available to view on the Department of Energy and Climate’s website, accessible here.
The Energy Technologies Institute (ETI) has announced plans to invest up to £25m in an offshore wind floating system demonstration project which would open up new areas off the coast of the UK and help bring generation costs down. The project will see the design, construction and installation of a full scale floating wind turbine system demonstrator by 2016 at a relatively near shore site with high wind speeds up to about 10 metres per second in water between 60 and 100 metres deep. It will be operated for at least two years to show it can generate high levels of electricity and be maintained without using specially designed vessels.
A Request for Proposals (RfP) was issued on Tuesday 25 October for organisations wanting to get involved in the project. The deadline for the notification of intention to submit a proposal is 6 January 2012 and the closing date is 27 January 2012. A project briefing event will be held in December 2011 for organisations wanting to know more about the project.
More information is available through the ETI website, accessible here.
UK falls 6 places in energy investment rankings
The Word Energy Council’s most recent report “Policies for the Future” which assesses countries’ energy and climate policies has the UK dropping from eighth to fourteenth place in its rankings for energy investment. The drop is attributed to the uncertainties surrounding the government's electricity market reform (EMR) programme which is deterring low-carbon investment and damaging the UK's ability to develop a stable, affordable and environmentally sustainable energy system.
Details of the report are available on the World Energy Council’s website accessible here.
If you need any advice on renewables projects and the law and regulations driving the industry, please get in touch with Bruce Farquhar, partner and Head of our Renewable Energy team.
This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.
