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A B C D E F G H I J K L M N O P R S T V W Y

Renewables

A quarterly bulletin covering the latest developments and issues in the renewable energy sector.

Latest Issue

In the latest issue of our Renewables Bulletin we have an update on the changes to the Feed-In Tarrifs Scheme with a look at the longer term implications following the subsidies cut to householders. In addition, we look at why planning permission was granted for a windturbine affecting the setting of listed buildings. We will also be exhibiting once again at the Energy Now Expo which takes place on 10-11 February at the Telford International Centre.

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Energy Now Expo – A look at the successful event held on 11-12 February

Wednesday 4th March 2015

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Renewables Bulletin – Issue 8 Special Issue

Brabners enjoyed two days exhibiting at the Energy Now Expo 2015  which took place on 11-12th February at Telford International Conference Centre where we were able to demonstrate legal issues relating to renewable energy, energy saving technology and land management issues and Rupert Jackson head of Brabners Renewable Sector even stepped in to give a talk on legal issues relating to leasing your land for a wind turbine when one of the speakers was unable to attend.

Brabners’ representatives were able to meet some old friends, make some new ones and were on hand to answer delegates’ and visitors’ queries on all legislative and legal matters affecting the renewable energy sector.

With all the attendees at the Energy Now Expo attending for genuine renewable reasons, whether it was developers, installers, owner operators or otherwise, the Brabners team were able to provide tailor-made advice gained through practical experience of working with clients acting for the renewables sector.

This is the second time Brabners has exhibited at the Energy Now Expo as they exhibited last year and attended previously as a delegate for a couple of years. Brabners has seen the exponential way in which the Energy Now Expo has grown and matured and is the best place in England and Wales for farmers and landowners to get the best overall view of all current renewable offerings. It is for these continual reasons we wish to continue to support the Energy Now Expo and we will be exhibiting again next year.

If you missed us, please do get in touch with either Rupert Jackson or Mark Rathbone to discuss your individual requirements. Otherwise we look forward to seeing you at Telford next year, if not before.

Once again Brabners ran a competition to win a Kindle Fire and we are pleased to confirm that this year’s winner was Thomas Minter of Malaby Biogas and the Kindle will be dispatched shortly. Thank you to all those who gave their contact details or cards to be entered into the draw.

Our Waste and Renewable Energy team has a wide range of experience to help with your requirements. Please do not hesitate to contact us if you wish to know more.

Rupert Jackson
Head of Agriculture, Liverpool
Waste and Renewable Energy Team
Tel: 0151 600 3396
Email Rupert

 

Mark Rathbone
Head of Corporate, Liverpool
Waste and Renewable Energy Team
Tel: 0151 600 3124
Email Mark
 


DECC held liable to compensate the Solar PV supply chain – Damages will be substantial

Monday 2nd February 2015

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Renewables Bulletin - Issue 7 - February 2015

Breyer Group plc and Others v Department of Energy and Climate Change [2014]

In July last year, judgment was handed down by the High Court in the landmark case of Breyer Group plc and Others v Department of Energy and Climate Change (DECC), ruling in favour of 14 UK solar supply-chain businesses in establishing their right, in principle, to recover substantial damages for the losses they incurred following the DECC’s decision to introduce retrospective early cuts to the “Feed-in Tariff” (FIT) Scheme for solar power generators in December 2011.

The cuts to solar FITs were ruled to be ‘unlawful and unfair’ and the High Court granted the 14 companies involved in the case victory in their £132 million claim for damages to compensate for the consequential devastating impact caused to the fledgling industry.

The case proved ground breaking for the solar industry; not only for the introduction of human rights violations in a claim for commercial losses suffered by solar firms, but also as it was the first time that contracts for solar projects had been qualified as “possessions” for the purposes of the European Convention of Human Rights (ECHR).

Background to the Breyer Case

In April 2010, the DECC introduced a FIT Scheme for small scale photovoltaic power installations to encourage low-carbon generation of electricity from renewable sources.

Under the scheme, those adopting the technology were to receive a fixed subsidy (per kWh of electricity they produced) to alleviate some of the financial burden caused by unaffordable start-up costs, without which a UK solar industry arguably would not have existed.

DECC’s original policy scheduled solar FITs to be reduced on 31 March 2012. The original subsidy rate was therefore due to apply to installations commissioned prior to 1 April 2012 and the DECC, upon launching the FIT scheme, stressed the importance of ensuring long-term certainty and investor confidence by delaying the introduction of tariff degression until after this date and by providing generators with tariffs at initial levels for two years.

Despite this original policy statement, on 31 October 2011 the DECC launched a consultation paper on proposed changes to the FIT Scheme, citing concerns that the Scheme was too generous and proposing that the lower FITs should apply from 1 April 2012, but with a retrospective eligibility date of 12 December 2011. Effectively, it was proposed that the cut-off date for eligibility for payment of the highest rates of FIT be brought forward to 12 December 2011 from 1 April 2012.

The drop in FIT was substantial – from 43.3p per kWh to 21p per kWh – and with only 6 weeks’ notice of the proposed change the UK solar market endured a catastrophic collapse. As a result of the date change, hundreds, if not thousands, of installations which would otherwise have been completed by the April 2012 cut-off date were abandoned.

An urgently-brought Judicial Review found that what the DECC had proposed was unlawful because it breached the statutory scheme for modifying FITs; the relevant statute did not permit the DECC to introduce secondary legislation with retrospective effect. Despite the successful Judicial review challenge, the ruling came far too late for work to be resumed on the abandoned installations which would have been completed on time, but for the now-unlawful DECC October proposal.  

Claim for damages

In January 2013, and in the aftermath of the successful Judicial Review challenge, civil proceedings were commenced against the DECC by a number UK solar supply-chain businesses, claiming compensation for losses resulting from the DECC’s 2012/2012 tariff review.

The claimants sought damages under Protocol 1, Article 1 (“A1P1”) of the ECHR, claiming that the DECC was in breach by depriving them of the peaceful enjoyment of their possessions, namely the solar PV installation, supply and generation contracts. The claimants argued that their losses arose from these contracts that they had entered into on or before 31 October 2011 in connection with intended solar PV installations. Those contracts were negotiated on the basis of an anticipated entitlement to the original FIT subsidy rate and were effectively rendered valueless by the DECC’s October proposal.

Judgment of the High Court

(1) ‘Possessions’ under A1P1

In addressing the issue of what might constitute ‘possessions’ under A1P1, the Court found that concluded contracts may be classified as assets and were therefore possessions protected by A1P1. They were tangible, assignable and, on the face of it, had a present economic value.

Significantly, the Court found that unsigned (or non-concluded) contracts were not yet assets of an economic value capable of realisation and that therefore these could not be defined as ‘possessions’ and protected by A1P1.

(2) Interference with Property Right under A1P1

As a matter of law and common sense, the Court held that DECC's publication of its October 2011 consultation proposal amounted to an interference with possessions under A1P1 as DECC acted carefully, deliberately and unlawfully. It could not be characterised, as DECC argued, as "merely a proposal".

Furthermore, the Court ruled that this interference could not be justified for two reasons: (1) DECC’s action was legally impermissible due to failure to comply with the FITs statutory scheme) and, as a matter of principle, an unlawful act was not capable of justification and (2) it was not a defence to argue that primary legislation could have been passed to overcome any error in DECC applying the secondary legislation.

Accordingly, the Court held that the claimants were entitled to damages to put them back into the position they would have been in had the wrongful interference with their possessions not occurred. In other words, the claimants were entitled to recover damages for concluded contracts rendered unperformable, but not non-concluded contracts.

Implications

The Breyer claim provides useful analysis of the extent to which commercial contracts and goodwill can be protected by the ECHR. It also serves to illustrate that the UK’s solar industry has a right to legal certainty for FITs and that policy mismanagement shall not go unpunished by the Courts.

The £132 million claim reflects the extent of the commercial damage inflicted by DECC’s policy mismanagement and the claimants can now pursue the quantum side of the claim. Their ability to recover will turn on the facts of each claim, as there must be some demonstration that a direct loss has been suffered in the particular circumstances.

The damages sought will be very substantial but DECC has indicated that it is considering an appeal to the Court of Appeal.

If you would like more information about the implications of this case or to discuss any issues you may have please contact:

David Seddon
Solicitor, Corporate
Tel: 0151 600 3375
Email:  david.seddon@brabners.com
 


Striking a balance? Latest update on Zero Carbon Homes by 2016

Monday 2nd February 2015

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Renewables Bulletin - Issue 7 - February 2015

On 8 July 2014, the government published its response and summary of responses to its consultation “Next Steps to zero carbon homes – Allowable Solutions” (“Consultation”).

This article briefly considers the government’s response (“Response”) and the initial reactions to it from the community. As a starting point, it is useful to remind ourselves of the background to the Consultation and Response. 

The government announced that all new domestic homes built from 2016 must be zero carbon.  This means that new homes built from 2016 onwards must have zero net emissions of carbon dioxide from all energy use over the course of a year.  To achieve this, the fabric of the building (insulation etc.) will have to be highly energy efficient and energy used in the building (heating, light etc.) must be provided by renewable sources.        

Achieving zero carbon emissions on-site will not always be practicable and in acknowledgment of this the government has introduced the concept of Allowable Solutions; a mechanism which allows developers to choose how they meet any deficit in the zero carbon homes standard on-site by fulfilling one of a range of off-site options which will be described in the Building Regulations.

The Consultation sought views “on a pragmatic, flexible way to help house builders meet the zero carbon homes standard by reducing some carbon emissions ‘off-site’”.  Respondents were categorised by organisation type and included builders/developers and local authorities amongst others.  Key points coming out of the Response are:

  1. There will be a national framework for Allowable Solutions, rather than local arrangements set up by local authorities;

  2. The Building Regulations will require new homes to meet Level 4 energy standards as defined in the Code for Sustainable Homes;

  3. Further consultation will be undertaken in relation to a proposed small site exemption, particularly around the threshold for such an exemption (the government issued a consultation on small sites exemption on 18 November 2014 which closed on 7 January 2015); and

  4. Allowable Solutions will follow a criteria based approach, rather than the Building Regulations setting out a prescriptive list, and they will not be restricted to carbon abatement measures in the non-traded sector.

The government has been criticised for “watering down” it’s commitment to zero carbon homes following the announcement in the Response and earlier this year in the Queen’s Speech that new homes will be built to Level 4 energy standards rather than Level 5, as previously indicated.  Together with the introduction of the Allowable Solutions framework, critics argue that the government is backtracking on its zero carbon commitment.  In its defence, the government has been keen to emphasise that it is "serious about delivering high quality, energy efficient homes in England", but it seems to be conscious of striking a balance between ensuring appropriate targets are in place on the one hand and ensuring that the targets are cost-efficient and achievable by industry on the other. 

How serious the government is in reaching the zero-carbon goal remains to be seen. There is still work to be done, particularly on finalising the mechanism and criteria for Allowable Solutions and finalising any exemption for small developments.  As with any renewable energy target and strategy, the zero carbon policy is a political hot potato.  Only a short time after releasing the Response, the government has already indicated that, should it be re-elected next year, it will create 100,000 starter homes for first-time buyers aged under 40 which would not be subject to the zero carbon homes standard.

In short, watch this space - it will be interesting to see if the government manages to strike a balance and achieve zero carbon by 2016 whilst maintaining growth in the industry and offering cost-effective solutions to developers to help them achieve targets.  In our next Renewables bulletin we will be looking at the current proposals for Allowable Solutions and how they might work in practice.

If you would like more information or to discuss any issues you may have please contact:

 

 


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