Belfast Telegraph

Monday 4 April 2016

Wind of change needed for renewable scheme

By John Simpson

Published 22/03/2016

Northern Ireland needs to change the way supplies are incentivised
Northern Ireland needs to change the way supplies are incentivised

The Department of Energy and Climate Change (DECC) has now changed the legislation in Great Britain and excluded new additional local Renewable Obligation Certificates (ROCs) from the scheme.

 Northern Ireland needs to radically change the way in which additional supplies of renewable energy are incentivised. The response to the existing Northern Ireland Renewables Obligation (NIRO) has been unexpectedly large, expensive, and relies on a cross-subsidy (postalisation of costs) with a similar scheme in GB which it believes cannot now be justified.

The NIRO scheme has the attractive selling point: it is proving a big boost to the supply of renewable electricity to the point where Northern Ireland can exceed the target for the proportion of electricity that is consumed from renewable sources.

The debate about moving away from NIRO is proving controversial. The problem is not that more electricity from renewable sources isn't needed. The critical problem lies in the unnecessary and excessive cost of incremental increases under the present NIRO scheme. That cost includes the complexity of maintaining part of the Northern Ireland scheme when the one in Great Britain is ending. There is also the complexity of dealing with so many investors in small capacity onshore wind generators.

Given a fresh start potentially a new scheme would avoid the lack of economic sense in many hundreds of small scale generators wishing to have grid connections for very small levels of input. Adaptations through connections using clusters and special contracts to enable supply constraints to be applied illustrate just two of the difficulties. DECC in London has announced a change in GB policy. Existing schemes will be allowed to continue for the guaranteed 20 years. But no new investments in onshore wind capacity will be accepted, subject to a defined restrictive transition arrangement.

Northern Ireland, if postalisation of costs is to continue, needs to 'stay in step'. Enterprise Minister Jonathan Bell has partially ducked the immediate issue. Northern Ireland will stay in step for the closure of eligibility of onshore wind generators with a capacity of 5mw and above on April 1.

Rather than stay in step for new small scale capacity plants, of up to 5mw, and risking the future value of the local NIROs, the minister is consulting further on decisions about future small scale investments.

Amber Rudd has told Mr Bell that Great Britain customers will be protected "by desocialising the costs of projects that do not meet the eligibility criteria". If Northern Ireland operates a different regime, we must cover the costs of projects that have different criteria.

This restrictive power for DECC would mean that NIRO certificates could not be redeemed in Great Britain if they emerge from investments that are not eligible.

And in addition, this may have a knock-on effect on confidence in the value of NIROs which may be restricted to the Northern Ireland market.

To emphasise the constraints on small scale capacity plants, DECC (acting for GB) "introduced enabling powers on January 18 in the Energy Bill to allow them to restrict GB suppliers from meeting their renewables obligations by presenting NIROCs from projects that do not meet the eligibility criteria".

If Mr Bell needs any confirmation that policy here should stay in step, this legislative warning is forbidding.

In Northern Ireland a new consultation on the possible closure of the NIRO is due. In what may be an indication of the possible outcome, the local department has established a NIRO closure working group. The group is to provide a forum to work together to ensure a managed approach to NIRO closure.

Until a final decision is made, this potentially opens an expensive window for local electricity customers if, after April 1, eligible new small scale onshore wind projects are allowed and initiated.

An unsatisfactory, possibly painful, change.

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