The long-awaited Renewable Electricity Generation Bill (the Bill) was introduced to the Northern Ireland (NI) Assembly earlier this week. The introduction of this Bill is an important milestone for developers and investors looking for a route to market for new NI renewable projects, particularly given the absence of a support mechanism for renewables in NI since the closure of the Northern Ireland Renewables Obligation (NIRO).

 

What does the Bill do?

The Bill grants the legislative powers required for the Department of the Economy (DfE) to provide financial assistance to encourage electricity generation in NI.

Whilst the bill itself is relatively light in detail, its passage into law is a key requirement for the DfE to deliver the proposed Renewable Electricity Price Guarantee scheme (REPG) which aims to incentivise the deployment of renewable generation at the most affordable price for customers, with the first auction launch expected in early 2027.

 

Why does it matter?

The introduction of the Bill is key in unlocking future investment in renewables in Northern Ireland. The statutory framework is necessary as it allows the secondary legislation to be passed to introduce auction-based support enabling financing for projects to move from pipeline to delivery.

By supporting increased local renewable generation through the enabling powers granted by this Bill, the DfE’s aim is to improve long-term price stability for renewable generators, encouraging investment in the renewables space in Northern Ireland.

 

Key Features of the Bill

Other than the usual enabling language that is typical of primary legislation of this nature, and similar to previous regulatory interventions in energy markets, including RHI or the recent energy pricing intervention, we’ve highlighted a couple of interesting features of the Bill below:

 

Supplier Levy

The Bill clearly envisages a supplier levy model. The funding model outlined anticipates that payments must be made by suppliers to a central counterparty responsible for managing and settling payments under the scheme.

Whilst the mechanics will follow in secondary legislation, the legislative architecture currently in place is a strong signal that the cost of the scheme will be recovered via suppliers and likely in turn passed through to electricity consumers via electricity bills.

 

Community Benefits

Notably, the Bill expressly provides for community benefits at primary legislation level.

It includes powers for the DfE to make regulations to obligate a generator participating in the scheme to make arrangements for payments to people who own or reside at a property within the locality of the generating station. The inclusion of these provisions is a unique feature of this proposed legislation and places the potential for direct generator-to-consumer payments on a statutory footing.

 

The exact wording in the legislation is below:

“The Department may make regulations that provide that, where a CfD has been entered into by a generator in respect of a generating station, the generator must make arrangements for the payment of specified sums to specified persons.”

 

Notably, this contemplates direct generator to consumer payments, rather than envisaging payment via suppliers (which is how similar schemes have operated and the previous energy bill discount schemes that operated in the UK were delivered).

The community benefits section of the Bill anticipates that the regulations may require generators to establish arrangements for payments to eligible local residents or property owners. In particular generators may be required to:

• make periodic payments potentially on an annual basis;
• calculate those payments by reference to the amount of electricity generated by the relevant facility or by reference to a specified cap;
• identify eligible recipients by reference to ownership or occupation at a property which is local to the facility;
• operate an application process for payments;
• ensure that the potentially eligible individuals are aware of the community benefit arrangements;
• determine applications for payment;
• demonstrate compliance with the regulations made by the DfE; and
• pay sums that are due to eligible people, with unpaid amounts potentially recoverable as a civil debt.

 

In practice, the requirements above could place a significant administrative burden on generators participating in the REPG scheme, especially where occupation rights at a property are unclear or change over time. For example, there could be multiple occupiers, tenants or informal arrangements which would make it difficult for generators to issue payments to the relevant individuals. There is also a potential concern that generators would be held liable and exposed to claims where they fail to identify an eligible person, incorrectly assess eligibility or make payment to the wrong recipient.

This approach has been a key topic of industry discussion for some time in relation to the practicality of generators making direct payments to local residents and may also have been a topic for debate within DfE.

The Economy Minister Dr Caoimhe Archibald has maintained in her statements that “any scheme must deliver for local communities”. In other jurisdictions such as in the Republic of Ireland with its Renewable Electricity Support Scheme (RESS), the preferred model has been the use of a community benefit fund linked to generation output, with payments administered collectively for local initiatives rather than distributed directly to individual households. This also mirrors similar conditions placed on planning permission and the community benefit funds or agreements locally with which many developers will be familiar.

Other jurisdictions such as Denmark give residents living near a project an opportunity to buy a share in it, meaning they can earn income from the project over time.

In New York, we understand there is a scheme whereby wind or solar generating stations beyond a certain MW must fund local residential bill discounts for 10 years via annual fees paid to licensed suppliers and distributed on a pro-rated basis (based on overall consumption).

However, there appears to be little or no global precedent that we can determine for a scheme whereby generators are required to make direct payments to local consumers, and as such, the practical delivery of this mechanism in NI will be a key area for consideration, and of potential concern to some funders, developers and project financiers.

It will be important that further detail is set out in secondary legislation which must clearly delineate the respective roles of generators, electricity suppliers and any central administrative body in providing payments to local residents.

Given the practical considerations identified, this might also be a topic for lobbying by generators at this primary legislative stage, so that the Bill is suitably broadly drafted to accommodate delivery mechanisms for distributing funds to consumers other than direct payments via generators (many of whom might not be equipped to handle the potential administrative burdens involved).

 

Next Steps

For developers, funders and energy users, the focus will now be on the secondary legislation required which will ultimately determine eligibility for receiving financial assistance from DfE, how the regime and auctions will operate in practice and the extent to which the REPG scheme will deliver a bankable route to market.

We will be watching closely for next steps, and will keep our clients and contacts in the renewables sector appraised of future developments.

 

For legal guidance and advice regarding navigating the new legislative framework, preparing for the REPG auction, assessing eligibility, or advising on wider energy matters, please contact Andrew Kirke, Charlotte Gourley or a member of the Energy team.

 

Relevant Links

The Renewable Electricity Generation Bill Renewable Electricity Generation Bill

Final Scheme Design for Renewable Electricity Support Scheme for Northern Ireland Final Scheme Design for a renewable electricity support scheme for Northern Ireland – Renewable Electricity Price Guarantee – (REPG)

Department for the Economy ‘Archibald introduces landmark Renewable Electricity Generation Bill’ Archibald introduces landmark Renewable Electricity Generation Bill | Department for the Economy

While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.