FEATURE RENEWABLES & LOW CARBON TECHNOLOGY Offshore wind: A vested interest


Lara Moore, an associate in the energy & waste team at Ashfords considers the current offshore wind investment and how this is driving the uptake of energy production from the renewables sector


Neart na Gaoithe) already held a Contract for Difference. Even, though the consents have now been reinstated, the financial impacts of such challenges should not be underestimated both in respect of project delay and legal and other costs. Brexit: Inevitably Brexit causes


uncertainty for the UK Energy Market. On 11 July 2017, it was announced that a House of Lords Committee has launched a new inquiry into the implications of Brexit for the UK’s energy security. Acknowledging this uncertainty the Committee said: “Leaving the EU exposes the UK energy system to some critical uncertainties, with potential impacts for both industry and consumers.” Key areas for consideration by the


T


he UK Offshore Wind Market is easily the most well-established of the


marine renewable energy technologies and therefore currently by far the most likely technology to receive mainstream investment ahead of wave and tidal stream projects. This is likely to remain the case for at least the next 5 - 10 years. For example, on 13 July 2017 it was announced that EDF Energy Renewables (EDF ER) purchased a further 11 Windfarm sites in Scotland with a potential capacity of 600MW (three of the sites have planning (100MW), one is in the planning system and seven are under development). According to EDF ER, overall it currently has 319MW in operation in Scotland with 1GW in development, including the 340MW Lewis Windfarm projects. On the 3 April 2017, the second


Contracts for Difference ('CfD') allocation round (£290 million) was launched. Developers of renewable energy projects (including wave, tidal stream, and offshore wind) with a delivery date set in 2021/22, or 2022/23 were able to apply. The process is run by UK National Grid and represents the first part of the government's commitment to provide up to £730 million of annual support for renewable energy during the course of the current parliament. Under a CfD, a generator is paid the


difference between the strike price (a price for electricity reflecting the cost of investing in the relevant technology) and the reference price (a measure of the average market price for electricity in the market of Great Britain). The initial stage of the allocation


process has now concluded, non- qualifying bids informed and the related appeal process has closed. UK National Grid has advised that all the applicants have been notified of the outcome of the sealed bid window for the £290 million allocation round that opened on August 14 2017.


SO, WHAT ARE SOME OF THE CONSIDERATIONS FOR DEVELOPERS INTERESTED IN INVESTING IN OFFSHORE WIND? Potential challenges to consents granted: For example, RSPB Scotland brought a challenge against the consents granted for four offshore wind farms (Firth of Forth and Tay Offshore Windfarms, totally 2.3GW). Initially they were successful, on the grounds of impacts on protected seabirds and the consents were quashed. However, on 16 May 2017 the Quashing Ruling was overturned by the Scottish Court of Session which ruled in favour of developers and the Scottish government. One of the affected windfarms (450MW


/ ENERGYMANAGEMENT


Figure 1: The skyline of Ardrossan, North Ayrshire, is dominated by an enormous wind farm.


committee include, "The UK’s approach to funding energy infrastructure investment and energy research post- Brexit." Therefore developers should consider placing Brexit focused review provisions in contracts to allow for future flexibility. Variation, revocation and suspension of


a marine licence: Apart from the very significant cost of obtaining Development Consent Order consent to authorise the construction and operation of an offshore windfarm, consideration also needs to be given to the risk of a post-consent variation of the (usually deemed) 'marine licence' granted as part of such a consent. A marine licence can be revoked, varied or suspend, by notice from the relevant regulator, at any time for a range of reasons including; navigational safety, change in circumstances relating to the environment and the catch all 'for any other reason that appears to the authority to be relevant.' This can occur long after the judicial


review period has passed, for example if a new or extended marine protected area is proposed for designation nearby. The potential impacts are obvious; delays, increased costs or ultimately, a project which cannot proceed. Therefore it is very important to include appropriate provisions in construction and other contracts to deal with these risks.


Ashfords ashfords.co.uk/sector/energy-waste e: l.moore@ashfords.co.uk


ENERGY MANAGEMENT | WINTER 2017 31


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