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European Commission approves extension to backstop date for REFIT 1

AUTHOR(S):
PRACTICE AREA GROUP: Projects
DATE: 13.08.2013

The European Commission has granted state aid approval to extend the backstop date for support under the Renewable Energy Feed-in Tariff scheme 2006 (“REFIT 1”) for an additional two year period up to the end of 2027.

REFIT 1 supports the construction of new electricity generation plant powered by wind, biomass and small scale hydropower. Payments are made to suppliers who enter power purchase agreements with renewable electricity generators who are in receipt of a REFIT Letter of Offer from the Department of Communications, Energy and Natural Resources (“DCENR”). RE-FIT 1 is supported by funds levied from Irish electricity consumers through the Public Service Obligation (“PSO”) mechanism. As Ireland’s PSO mechanism constitutes a form of State aid, the Irish Government was required to obtain EU approval in relation to the establishment of RE-FIT 1 and changes to the scheme.

Under the terms of REFIT 1 support was available for a maximum of 15 years, up to 31 December 2025. In order to quality for support, projects were originally required to be operational by 31 December 2010. However, a number of projects did not become operational by this date. In order to address this extensions were granted by DCENR on a project by project basis. However, following the introduction of the REFIT 2 and REFIT 3 schemes, DCENR decided than no further extensions beyond September 2013.  As a result of the Commission’s recent state aid approval, projects will now be able to avail of REFIT 1 support for a maximum of 15 years up to 2027, if they are operational within the applicable deadline agreed with DCENR.

Projects currently qualified for support under REFIT 1 which will not become operational by their operational deadline may apply to transfer to the REFIT 2 and REFIT 3 schemes. The terms of these schemes differs to those under REFIT 1 and the resulting financial implications will need to be evaluated by transferring projects.

A copy of the Commission’s notification of approval is available here.

If you have any questions on this topic please contact Michael O’Connor (michael.o'connor@matheson.com) or Heather Murphy (heather.murphy@matheson.com).

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