In our three-part series published last week, we outlined the possibility of the UK Government closing the Renewables Obligation (“RO”) scheme to new onshore wind generating stations in 2016, a year earlier than expected.

On 18 June 2015, the UK Department for Energy & Climate Change (“DECC”) formally announced the UK Government’s intention to close the RO across Great Britain to new onshore wind generating stations from April 2016.  Energy and Climate Change Secretary Amber Rudd stated: “[…] Onshore wind is an important part of our energy mix and we now have enough subsidised projects in the pipeline to meet our renewable energy commitments”.

Details of the legislation bringing the UK Government’s intended changes have not yet been provided, but the impact on the future growth of onshore wind in the UK is potentially significant.  Last year, onshore wind generated 5% of the UK’s total electricity, with the help of “over £800m of Government subsidies”, according to DECC.  Currently, 5,500 onshore wind turbines have been installed or are under construction in the UK, and another 3,000 have planning permission.  It is not yet known how many projects will be affected by the early closure of the RO.

While DECC has indicated that up to 5.2 GW of onshore wind capacity could be eligible for grace periods, it has yet not confirmed that this will be the case.  Its current position is that the UK Government is  “minded to offer” grace periods “to projects that already have planning consent, a grid connection and acceptance, as well as evidence of land rights”.

Prior to the announcement, there was uncertainty over whether the changes would extend to Scotland.  It now appears that the UK Government intends for the changes to affect the whole of Great Britain, which has reportedly been “met with outcry” by the Scottish Government.  Scottish Energy Minister Fergus Ewing described the decision as “deeply regrettable”, adding that it “will have a disproportionate impact on Scotland”.

The Scottish Government is but one of many critics of the decision, along with industry representatives, UK media outlets and business commentators.  Michael Pollitt, professor of business economics at Cambridge Judge Business School, has described the proposed changes as “a bad mistake”, coming at a time where the costs of onshore wind technology “are coming towards grid parity”.  Katja Hall, deputy director-general of the Confederation of British Industry expressed broader concerns: “Cutting the Renewables Obligation scheme early sends a worrying signal about the stability of the UK’s energy policy framework.  This is a blow, not just to the industry, and could damage our reputation as a good place to invest in energy infrastructure.

As outlined in our earlier series, there are possible legal avenues available for challenge and redress for those affected.  According to Mr Ewing, the Scottish Government has “warned the UK Government that the decision, which appears irrational, may well be the subject of a Judicial Review”.

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Photo of William Lowery William Lowery

William Lowery is of counsel in the firm’s international arbitration and litigation practices. His recent work includes securing an award in excess of $5 billion as compensation for expropriated oil and gas assets, representing clients in international arbitration proceedings arising from EPC contracts…

William Lowery is of counsel in the firm’s international arbitration and litigation practices. His recent work includes securing an award in excess of $5 billion as compensation for expropriated oil and gas assets, representing clients in international arbitration proceedings arising from EPC contracts, and advising clients in gas price review negotiations and arbitrations.

William has represented clients in ad hoc proceedings and arbitrations governed by a variety of arbitration rules, including those of the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), the London Court of International Arbitration (LCIA), the London Maritime Arbitrators Association (LMAA), and the United Nations Commission on International Trade Law (UNCITRAL). He also has represented clients in court litigation related to the recognition and enforcement of arbitration awards and foreign court judgments, as well as discovery under 28 U.S.C § 1782.

William has specialized experience in the energy and natural resources sectors, including disputes arising under: production sharing contracts, joint-operating agreements, and other license related agreements; oil and gas services contracts (both onshore and offshore); gas storage contracts; pipeline transportation agreements; long-term supply agreements for a variety of energy-related commodities (including oil, gas, LNG, LPG, coal, U3O8, and LEU); and various electricity-market related contracts and regulatory issues. William has also regularly represented and advised clients in prices reviews under gas supply agreements and LNG sale and purchase agreements.