The Renewables Obligation Order (Northern Ireland) 2009

EXPLANATORY NOTE

(This note is not part of the Order)

This Order imposes an obligation (“the renewables obligation”) on all electricity suppliers, licensed under the Electricity Order (Northern Ireland) 1992 (“the Electricity Order”) who supply electricity in Northern Ireland, to produce a certain number of renewables obligation certificates in respect of each megawatt hour of electricity that each supplies to customers in Northern Ireland during a specified period known as an obligation period (Article 5). It also “bands” the different technologies that are used to generate electricity from renewable sources, meaning that the number of certificates that will be issued in respect of that electricity depends on the way in which that electricity has been generated. The Order provides for the renewables obligation to be administered by the Northern Ireland Authority for Utility Regulation(“the Authority”) who are responsible for issuing renewables obligation certificates (NIROCs) to renewable electricity generators on their renewable output. These certificates are sold to electricity suppliers with or without the associated renewable electricity.

Alternatively, instead of producing the required number of certificates in respect of all or part of their renewables obligation, a supplier is permitted to make a payment to the Authority (articles 40-41).

Part 1 sets out the interpretation provisions for the Order, and defines biomass and waste. In particular, Article 3 specifies, as provided for in Article 55F of the Energy (Northern Ireland) Order 2003 (“the Energy Order”), that waste constitutes a renewable source if not more than 90% of it is, or is derived from, fossil fuel. It also sets out how the proportion of waste which is, or is derived from, fossil fuel is to be determined and includes specific provisions relating to municipal waste.

Article 4 defines biomass and also sets out the circumstances in which a fuel (not being biomass), may be treated as biomass by virtue of being used in a generating station with biomass. It also provides how the proportion of biomass which is composed of fossil fuel is to be determined.

Part 2 sets out how the renewables obligation is calculated and what a supplier needs to do to meet their obligation. In particular, Articles 6 to 10 set out the calculations that the Department and the Secretary of State for Energy in the UK must undertake before the start of each obligation period (apart from the 2009/10 obligation period) to determine the total UK renewables obligation for that period.

Article 11 sets out the circumstances where each calculation is to be used to determine the total obligation for electricity suppliers in Northern Ireland.

Article 12 determines the number of renewables obligation certificates to be produced by individual electricity suppliers to discharge their renewables obligation. Paragraph (4) of this Article requires the Department to publish by the 1st October preceding an obligation period the number of renewables obligation certificates that a supplier will be required to produce in respect of each megawatt hour of electricity that he supplies to customers in Northern Ireland.

Article 13 provides for an electricity supplier to discharge his renewables obligation by the production to the Authority of a renewables obligation certificate issued in Great Britain. This Article also sets out the co-firing cap i.e. licensed suppliers are not able to meet more than a specified proportion of their obligation by presenting renewables obligation certificates issued in respect of electricity generated by a generating station fuelled or driven partly by renewable sources and partly by fossil fuel.

In Part 3, Article 15 sets out those conditions that need to be met for electricity to be regarded as having been supplied to customers in Northern Ireland for the purposes of Article 54(3) and (4) of the Energy Order. Article 16 sets out when electricity is to be regarded as being used in a permitted way for the purposes of Article 54(5) and (6) of the Energy Order.

In Part 4, Articles 17 to 21 set out circumstances in which NIROCs are not to be issued.

In Part 5, Articles 22 and 23 set out how the number of NIROCs relating to a generating station’s renewable output is to be calculated. Article 24 makes specific modifications for qualifying combined heat and power generating stations.

In Part 6, Articles 25 to 29 are the “banding provisions”, which govern the amount of electricity in respect of which each NIROC is to be issued. Article 25 contains the general rule, which is that the amount of electricity in respect of which a NIROC is to be issued depends upon the way in which the electricity was generated, and is set out in Part 2 of Schedule 2. There are special provisions governing NIROCs issued to qualifying combined heat and power generating stations (Article 26), microgenerators (Article 27), generating stations which were accredited as at 11th July 2006 (Article 28), and generating stations which were accredited or held preliminary accreditation as at 31st March 2009 (Article 29).

Article 30 sets out conditions which must be satisfied before the “banding provisions” apply to certain generating stations in respect of which a statutory grant has been awarded. Article 31 provides for the Department to review the banding provisions at four yearly intervals, with the first review commencing in October 2010. A review may also occur at any other time if any of the circumstances set out in Article 31(3) arise.

In Part 7, Articles 32 to 36 provide for the issue of NIROCs – that is to say, renewables obligation certificates issued under this Order – by the Authority. Article 37 provides for the revocation of NIROCs in certain circumstances. Article 38 makes provision for the issue of NIROCs in respect of electricity generated under contracts under the Non-Fossil Fuel Obligations (NFFO).

Where suppliers discharge their renewables obligation (in whole or in part) by making payments to the Authority, the payments are held in the buyout and late payment funds. Part 8 sets out how the buyout and late payment funds are to be handled. Articles 42 and 43 require the Authority to make payments from those funds into the consolidated fund and to the Great Britain authority to pay for the costs of administering the renewables obligation. Once these payments have been made, the remainder of the money in the funds is paid to UK suppliers, who have discharged their renewables obligation (in whole or in part) by presenting renewables obligation certificates, in accordance with Article 44. The exception to this occurs where £50,000 or less is all that is held in the late payment fund, in which case that amount will be retained by the Authority and will be paid out in the following obligation period (Article 43).

Part 9 makes provision concerning information which is to be provided to the Authority (Articles 45 and 46), which is to be provided to the Department (Article 47), and which is to be exchanged with the Great Britain authority (Article 48). It also sets out functions to be discharged by the Authority, in addition to those it is required to discharge in order to administer the renewables obligation (Article 49).

Article 50 provides for the preliminary accreditation and accreditation of generating stations. In order to be eligible to claim NIROCs in respect of electricity generated from eligible renewable sources, a generating station must have obtained accreditation from the Authority.

Article 52 modifies the provisions of specific Articles in this Order to enable a microgenerator to be able to claim NIROCs on an annual rather than a monthly basis.

Article 53 revokes the Renewables Obligation Order (NI) 2007 (“the 2006 Order”) and the Renewables Obligation (Amendment)Order (NI) 2007. The provisions of the 2007 Order are saved in respect of all outstanding obligations or requirements imposed by it.

A regulatory impact assessment is available from Sustainable Energy Branch, Department of Enterprise, Trade and Investment, Netherleigh, Massey Avenue, Belfast, BT4 2JP.

The 2007 Order revoked and re-enacted the Renewables Obligation Order (NI) 2006 (S.R. 2006 No.56) (“the 2006 Order”). The 2006 Order revoked and re-enacted the Renewables Obligation Order (Northern Ireland) 2005 (“the 2005 Order) which gave effect to Article 3.1 of the European Directive on the promotion of electricity produced from renewable energy sources in the internal market (Directive 2001/77/EC) O.J. No. L283/33 27.10.2001. A transposition note setting out how the main elements of this Directive have been transposed into United Kingdom law is available from the Renewables Financial Incentives Team, Department of Energy and Climate Change 1 Victoria Street, London, SW1H 0ET. This Order does not raise any new transposition issues. Copies have been placed in the libraries of both Houses of Parliament, Westminster.