Ask the Architect – The Changes to Incentives for On Shore Wind
The government announced changes to the way it subsidies renewable energy on the 4th December, indicating that they will cut support for onshore wind and solar energy, but give more backing to offshore wind. Changes to subsidies in relation to the additional costs it adds to our energy costs have caused concern in the Northern Ireland farming sector, with the fear that we may see a cut in the ROC payments for farm scale wind.
The recent announcement of the major changes to subsidies will have no effect on the ROC payments for farm scale wind in Northern Ireland. The changes are for large scale, commercial projects and will only affect projects larger than 5MW from 2015 onwards. The standard 250kw farm scale turbine will be totally exempt to these changes.
The impact that wind energy has had on the NI farming community should not be underestimated and we are proud that this column was the first to report the changes to ROCs that started this new industry. More than 1000 wind turbines are now approved or are on the cusp of being approved. The vast majority of these have been done in conjunction with a developer with the farmer getting on average £13,000.00 a year rental. If even 500 of these turbines go ahead it will see an additional £6,500,000.00 going directly into the hands of the Northern Irish Farming Community every year, not to mention the jobs that the industry has created. This is money from outside Northern Ireland flowing into the country; however, Northern Ireland Electricity has the potential to destroy this industry. We would hope that the obvious issues around grid connection can be resolved and that connection to the network can be speeded up.
The wind industry is not without its pitfalls and as many of the applications are now achieving planning we would like to indicate a number of points that should be addressed when negotiating contracts.
- If you have an average wind speed site then your turbine will not produce above average revenues. Be realistic about the output of the turbine if you are involved in a revenue share deal.
- Ask for a lease agreement from any of the turbine developers that you are thinking about working with and send this to your solicitor for checking.
- Ensure that the turbine developers are going to pay NIE for the grid connection quote and have it written into the lease that this is done within 1 week of signing the contract.
- Ensure that there is an uplift in the contract to cover for inflation, the turbine developer will likely suggest linking it to the Bank of England base rate or one of the inflation rates but it may be better for you if it was linked to the cost of electricity as this currently goes up faster than inflation.
- Ensure that the turbine developer has a track record of completing projects and isn’t just planning to sell the lease on. Request to see a turbine that they have up and spinning.
- Have your solicitor remove any elements of the lease that allows for the sale of lease to a third party or at least strongly question why a turbine developer would want to do this.
- Request to see a bank statement that has the funding for the project in it as finance for these things are notoriously difficult to get and delays in getting finance will mean that you don’t get paid.
- Ensure that you start getting paid as soon as the turbine developers takes control of the site.
- Request to be copied into all correspondence between the developer and NIE to ensure that you understand the time frames.
2020 Architects offer a free service looking at approved sites and helping to negotiate leases with turbine developers, do not hesitate to contact us.