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Shetland wind farm ruling could stop Scotland doubling renewable energy output

Approved electricity generating projects with the potential to double Scotland’s wind power are under threat after a legal ruling which halted plans for a major wind farm on Shetland, according to law firm HBJ Gateley.

Some 32 projects with a combined total of more than 3800 megawatts (MW), or 3.8 gigawatts(GW), have been given consent, according to Scottish Government figures*, with Scotland’s entire onshore wind capacity* currently totalling 4.1GW. Offshore wind energy currently produces just 190 megawatts of power.

A further 53 applications for consent are still outstanding, with only eight known to have a generating licence. The Scottish Government has said it will work with Ofgem to save these projects.

Last week, the Court of Session ruled that any organisation wishing to apply to construct a new power station with a generating capacity of over 50MW would have to first obtain a generation licence from Ofgem. Lady Clark of Calton made the decision following a judicial review of the Scottish Governments decision to approve a 103-turbine windfarm on Shetland, after a challenge from environmental protest group Sustainable Shetland.

According to the electricity regulator Ofgem only nine companies in Scotland have been granted an electricity generation licence. Some businesses are also exempt from the licensing regime. Up until last week’s decision, there was no expectation that a licence was required to enable an application to be made for consent under section 36 of the Electricity Act 1989.

The Scottish Government has confirmed it will challenge Lady Clark’s ruling, and it was reported today (Friday) that it is working with Ofgem to save outstanding applications for wind farm projects which could fall foul of the decision.

Paul Minto, an energy partner at HBJ Gateley, said the 1989 Act needed to be updated to reflect the modern energy industry. Section 36, which no longer applies in England and Wales, has been interpreted by Lady Clark as compelling applicants to obtain a generation licence.

He said: “When the Electricity Act was introduced there were only the big six energy producers burning oil, coal and gas, along with nuclear energy, but with the advent of renewable energy an entire new industry has evolved with smaller energy generation companies emerging. The larger wind, wave, tidal and hydro projects will be caught by this decision.

“I would expect that moves to standardise the consenting requirements across the UK are already underway, but for the time being this decision poses a threat and additional costs to the newly emerging renewables industry.”

It can take two or three years for a wind farm to be built following consent, so current projects with consent from the Scottish Government may be vulnerable if they haven’t received their generating licence from Ofgem . In some cases the consents were awarded despite the local authority recommending refusal of the projects for planning reasons. If Lady Clark’s decision remains then it may cause some of those cases to be challenged again.

Paul Minto said: “This is potentially a major disadvantage for the Scottish renewable energy sector, which contains many growing businesses, providing new jobs and already dealing with many risks. It’s my hope this issue can come to a positive conclusion quickly, and avoid any further uncertainty for these companies who are at the front line in delivering our energy and climate change targets.”

HBJ Gateley is a top-50 full-service, national UK law firm with over 150 partners and more than 400 fee earners. It operates from offices in Edinburgh, Glasgow, London, Manchester, Birmingham, Leicester, Leeds, Nottingham and Dubai. It has specialist teams covering all aspects of legal services, including corporate, banking, commercial, real estate and development, corporate recovery and restructuring, energy and climate change, renewables, planning and environmental, technology, social housing and regeneration, construction and infrastructure, employment, pensions, dispute resolution, shipping and transport as well as private client and financial services.

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