Gone with the wind

The Renewables Obligation was introduced in 2002 by the UK Government to provide incentives for the deployment of large-scale renewable electricity in the UK. However, on 18 June 2015, the Government announced that it intends to end new public subsidies for onshore wind farms by legislating to close the Renewables Obligation ("RO") across Great Britain to new onshore wind generating stations from 1 April 2016 (House of Commons: Written Statement). The reasoning for this is, according to Energy and Climate Change Secretary Amber Rudd:

"We want to help technologies stand on their own two feet, not encourage a reliance on public subsidies. So we are driving forward our commitment to end new onshore wind subsidies and give local communities the final say over any new windfarms."

Although the Department of Energy and Climate Change ("DECC") are still considering the options for continuing support for community energy projects as part of the Feed-in Tariff Review later this year, the current government proposal will likely have an impact on wind farm developments which have been held up through persistent litigations and continuous Court appeals. This will have a particular impact in Scotland where there is a significant onshore wind energy sector. The SNP are pushing back on the UK Government’s proposals on the basis that (1) the SNP Government wants to generate all of Scotland’s electricity needs from green energy sources by 2020 and windfarms are a key part; and (2) the government’s proposals of 18 June 2015 will cause major uncertainty for investors across the renewables sector. Mr Fergus Ewing, the SNP Energy Minister, stated on 18 June 2015:

"The decision by the UK Government to end the Renewables Obligation next year is deeply regrettable and will have a disproportionate impact on Scotland as around 70 per cent of onshore wind projects in the UK planning system are here.

This announcement goes further than what had been previously indicated. It is not the scrapping of a ‘new’ subsidy that was promised but a reduction of an existing regime - and one under which companies and communities have already planned investment."

This article considers the practical impact the government proposals will have on wind farm developments which the subject of ongoing litigation, particularly those with planning consents already in place.

Prejudice to Developers in Scotland

The primary question for developers who are in the midst of litigating over a proposed onshore wind farm development is, what is the status of a challenged planning consent for the purposes of RO eligibility?

One scenario may be that planning consent was granted years ago, but because of the drawn out nature of the Court process, there is no final Court Decision yet. Appeals from local review body decisions and the Scottish Ministers to the Court of Session are common in Scotland. Usually in these circumstances the appellant objecting to the planning decision will also make an application to the Court for an interdict to prevent any form of development until there is a final determination of the case. It could be said that until the planning consent has been quashed by the Court, the consent still exists; however, the interdict prevents it from having any practical effect.

This may not be a problem, if the existence of planning consent is all that is required. However, in the case of the similar previous phasing out of the RO for solar PV schemes, the generating station also needed to be commissioned on or before 31 March 2016. If a similar condition is to be applied to onshore wind developments, a developer may at the end of a lengthy appeals process find they have missed the boat for completing works, although their planning consent is ultimately upheld.

The situation will be worse for those who are challenging a rejection to planning consent, or are appealing a quashing of consent by the Court. The Government response to the consultation on solar PV appeared to have little sympathy for those developers in the midst of an appeal. There was some concession in only requiring a developer to have submitted a planning application by 13 May 2014, noting that:

"[w]e accept the argument that a developer has no control over the outcome of a planning application once submitted, and that where planning permission is rejected, it may be overturned on appeal."

However, actual planning permission still needed to be obtained on or before 31 March 2016. Even if similar concessions are made for onshore wind, where appeals may take a number of years to complete, developers once again risk being out of time.

Grace Period

The Secretary of State has confirmed that there will be a grace period for projects that, as of 18 June 2015, have planning consent, a grid connection offer and acceptance and secured land rights, however there is little detail on the specifics of this grace period.　

Critically, however, without any confirmation that a grace period will apply, the development would have to be built and operational by 1 April 2016 to be entitled to be accredited for ROC. The question therefore becomes: given government interference in the industry is causing prejudice and losses to hundreds of investors and developers, are there any remedies? The answer to this appears to be no if we look at the approach the Courts have taken so far in respect of solar PV. Judicial reviews have been refused by the English Courts and thus far there have been no solutions to the losses which will be incurred by the renewables industry if these proposals are implemented. Answers are needed.

Questions to be address by the Government or laterally, by the Courts

1. Given the Scottish Government’s attitude towards Westminster’s proposals of 18 June 2015, can we consider the possibility that the Scottish Courts will be more inclined to grant judicial review as a remedy?
2. If a developer has been litigating for a number of years, and through no fault of its own has yet to receive a final Court Decision, what are the chances of it being able to apply to fall within the grace period on the basis of prejudice? Refusal may leave open up a further ground of recourse against DECC
3. How are the Scottish Courts going to approach the issue of expenses in Court proceedings when considering whether to grant a protective expenses order in favour of an appellant, particularly in the instance where an appellant has the ability to draw out proceedings until the developer has lost the opportunity for subsidies under the new proposals?

The UK government still has a number of questions to address. CMS will be addressing the above issues, together with overall concerns from the industry as matters develop but we expect that if the proposals of 18 June 2015 are implemented in Scotland as suggested by the UK government, the Scottish Courts may not take quite the same approach as the English Courts have thus far to solar PV.

This eAlert was co-authored by Eilidh Douglas.