The Department of Energy and Climate Change (DECC) announced on Wednesday that they intend to change the proposed banding review process and intend to consult on new banding proposals under the Renewables Obligation (RO) in Summer 2011 with a view to confirming the new bands by Autumn 2011.

Banding Review Under The Renewables Obligation Order 2009 (RO 2009)

Under the RO 2009, banding reviews of ROCs are scheduled to take place every 4 years, with the first review, as scheduled, having begun in October 2010. The Secretary of State however has the power to choose to review all or any of the banding provisions at any time if certain conditions are satisfied (Regulation 33(3) RO 2009).

DECC noted that reviewing the banding at regular intervals was necessary 'to ensure that as market conditions and innovation within sectors change and evolve, developers continue to receive the correct level of support necessary to maintain investment in the renewables industry' (DECC - Renewables Obligation Banding Review Process - March 2010).

Originally, following implementation of the RO 2009, the Government proposed to launch a statutory consultation in Spring 2012 with the new bandings to come into effect on 1 April 2013.

DECC Press Release

Following the press release, it is clear that DECC now intends to consult on the review process a year earlier than in the proposed timetable and that they are due to confirm the banding by Autumn 2011. Please note that the new bands will still come into force on 1 April 2013 (and 1 April 2014 for offshore wind).

The intention appears to be to provide that developers of new large-scale projects obtain greater security about the possible support they are likely to receive under the RO.

It has long been a market frustration and investment risk that any change to the banding could potentially disrupt renewable energy projects. Developers and investors will generally be reluctant to engage in projects with long construction and commissioning periods if these are likely to run beyond 1 April 2013 or 2014 in the case of offshore wind. In confirming banding reviews at an earlier stage this will no doubt provide greater assurance to the industry, however, it is important to note that any statement made next year will be a policy statement only which may not be capable of being relied upon for legal purposes.  Much will depend on the wording and whether investors follow this up with an individual or group assurance from the Government.

If you require any further information or are interested in discussing any of the above please contact:

Michelle Thomas, Partner
Head of clean energy and sustainability
Tel: 0845 498 7553

Jean-Pascal Boutin
Senior Associate
Tel: 0845 498 8265

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