Ireland: Renewables Update, March 2012

Last Updated: 30 March 2012
Article by Alex McLean, Alan Bissett and Garrett Monaghan

In this update, we look at a range of topical issues relevant to the Irish renewable sector.

Wind Turbine Planning

A recent ruling by An Bord Pleanála (the 'Board') has cast doubt on the ability of developers to substitute larger turbines to those described in applications that have been granted planning permission.

Planning permission had been granted by the Board to erect four Gamesa G58 turbines. Subsequently, the local planning authority agreed in writing that two of those G58 turbines could be substituted for G80 turbines but at a lower hub height on the basis that these changes were immaterial. Having received express written agreement to the alteration/ deviation from the planning authority, the developer secured funding and installed two G80 turbines and one G58 turbine. Several years later, the Board was requested to consider whether the installed G80 turbines were within the scope of the original planning permission. In making its ruling, the Board overturned a report prepared by its own Senior Inspector and determined that the turbines were not within the scope of the permission; thereby casting doubt over the planning status of the installed turbines. As part of an application by the developer for judicial review of the Board's decision the High Court has determined that there are substantial grounds for challenge to the Board's decision.

Although there will be projects where the case can be distinguished or where the risk can be limited without the need for a substitute consent; this case does suggest that planning permission could be required for alterations/deviations that would otherwise be regarded as immaterial.

Tie-breaks, constraints and curtailment

Given the level of wind generation anticipated to connect to the all-island electricity system over the next number of years, it will become necessary to choose between wind generators in circumstances where the amount of price taking wind generation on the system exceeds system demand or where more than one wind generator is impacted by a specific system constraint. The recent SEM Committee Decision Paper (December 2011) entitled Treatment of Price Taking Generation in Tie Breaks in Dispatch in the Single Electricity Market and Associated Issues Decision Paper (the "Tie Breaks Decision") has been the subject of intense scrutiny. Following representations from the Irish Wind Energy Association and other interested parties, we understand the SEM Committee has agreed to reconsult on the Tie Breaks Decision.

A new proposed decision paper is anticipated to be published in March 2012. In any event, it is worth noting the remit of the Tie Breaks Decision. The Tie Breaks Decision determines the order of constraint and curtailment of price taking generators of equal priority and proposes a system of 'grandfathering' based on firm access quantities ("FAQ") such that generators with no or partial firm access will be curtailed ahead of those with full firm access. Within curtailment categories, Gate 3 generators in Ireland will be curtailed ahead of Gate 1 generators.

This 'grand-fathering' approach could result in firm (pre Gate 3) projects being subject to a lower incidence of constraints and curtailment relative both to Gate 3 generators and to fully or partially non-firm generators. Conversely however this will result in a relatively larger incidence of curtailment for new entrant non-firm generators.

Construction Contracts Bill

The Construction Contracts Bill 2010 which was initiated by Senator Feargal Quinn as a private member's bill (and initially drafted by Arthur Cox) is due to be enacted this year. The Bill imposes minimum payment terms and periods into contracts relating to construction operations with a value of €200,000 or more and extends to include labour only and professional services contracts. The Bill also confers a statutory right on either party to a construction contract to refer payment disputes to adjudication despite what is set out in their contract. Similar legislation has existed in the UK since 1996 but that legislation does not apply to contracts where the primary activity is power generation. There is no such exception in the Irish Bill.

Although the Bill does not currently relate to supply only contracts, the responsible Minister (Brian Hayes) has suggested that this may be amended to extend coverage of the Bill to suppliers of "bespoke" materials for a particular project.

REFIT 2

REFIT 2 received approval from the European Commission on 12 January 2012. In February 2012 the Irish Government approved the introduction of the REFIT 2 scheme, with draft terms and conditions for the scheme being published on 28 February 2012. Reference prices for REFIT 2 are as follows:

REFIT 2 is designed to incentivise the addition of 4,000MW of new renewable electricity capacity to the Irish grid through small and large scale onshore wind, small hydro (<5MW) and biomass landfill gas. Plants must be new plants in all cases, neither built nor under construction on 1 January 2010, however, projects must be operational by the end of 2015. The support for any particular project cannot exceed 15 years and may not extend beyond 31 December 2030. Adjustments to the reference prices are by way of indexation annually, by the annual increase, if any, in the consumer price index in Ireland.

REFIT 3

The Terms and Conditions of the REFIT 3 scheme were published on 27 February 2012 and the scheme is now open for applications. REFIT 3 is to support 310MW of biomass related categories, covering 50MW of Anaerobic Digestion (both AD CHP and AD non-CHP of below and above 500 kW categories), 100MW of non Anaerobic Digestion Biomass CHP (of below and above 1500 kW categories), and 160MW of biomass combustion and co-firing. Limitations on plant size, duration and operational deadlines have been set. The support for any particular project cannot exceed 15 years and may not extend beyond 31 December 2030. Adjustments to the reference prices are by way of indexation annually, by the annual increase, if any, in the consumer price index in Ireland.

Additional information for REFIT 2 & 3 can be obtained from the Department of Communications, Energy and Natural Resources website at http://www.dcenr.gov.ie/Energy/ Sustainable+and+Renewable+Energy+Division/REFIT.htm .

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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