While the coverage of DECC’s proposed solar incentive changes last week was understandably heavily weighted to the fate of FiTs, it is the details behind the RO scheme reset that are far more relevant to UK solar deployment figures over the next 15 months.
As has become the norm sadly for solar policy in the UK, eleventh hour rushed policy revisions are generally open to interpretation from a legal standpoint. The RO proposals from DECC last week are no different, but potentially have the added scope to take legal challenges from the industry to an altogether new level.
The issue relates to one word – validation. For those not savvy with UK planning protocol, there is a difference between the words submitted, received and validated. In DECC’s 22 July 2015 consultation documents, grace (or qualified grandfathering) of RO projects from that date used the received terminology for planning applications ending 22 July 2015.
And so the industry reacted, and of course, there was a deluge of planning applications submitted and received by LPAs before 23 July 2015. Almost all of these applications had been in the works for some time, as long as years since original screening, and so it can hardly be said that there was an influx of new applications on that day alone. Rather, the industry simply reacted to a deadline of a matter of hours, as a means of recouping large upfront investments that had been incurred.
Fast-forward to last week, and DECC would appear to have introduced the condition of validation by end 22 July 2015.
Let’s not kid ourselves for one moment. This is a massive deal. It is also hard to assume that it was not introduced by DECC as a deployment-limitation exercise, having seen from the planning portal the amount of applications submitted and received by LPAs on 22 July 2015.
The fact is that validation typically comes after submission/receipt, and as such many of the applications that were submitted by planners on that day would not be validated then, but after. At face value, they would not be grace compliant and as such may be assigned as distressed in more ways than one.
But the problems for DECC could go even deeper. While there will be a raft of the best lawyers currently scrutinizing the introduction of validation into last week’s RO proposals from DECC, let’s use one example to show just how precarious DECC’s legal position on this could be:
Consider a planning application for a 4.9MW solar farm that was submitted and received before DECC’s July 2015 consultation announcement, say 10 July 2015. Now, let’s imagine that this planning application was not validated until after 22 July 2015. The site could have been approved, discharged, built and grid-connected before last week’s announcement. As such the site would have been fully RO compliant (forget even grace conditions).
So when, last week, DECC introduces the 22 July 2015 validation deadline and hey-presto, the site above is now not grandfathered.
There is a word for this: retroactive. If you follow the letter of the law only for a change in legislation to come out after the event that then alters the legal framework you were working under in the past, it is a retroactive policy adjustment.
What impact this may have on deployment in Q1’16 under 1.3 ROCs, or any likely build out under 1.2 ROCs, is yet to be fully understood.
If the change of wording for grace-compliancy wasn’t intended by DECC, then surely DECC needs to correct this as soon as possible. If it was a means of creating even more investor uncertainty in solar, then the timing of the announcement before parliamentary recess could be considered job-done.
Either way, this one word – whatever happens in the end – will probably end up costing developers a bucket in legal costs, and is something that frankly nobody in the industry wanted, on top of the hammering policy changes have had on businesses over the past 12-18 months in UK solar.