ALTERNATIVE ENERGY SUPPLIES – future considerations for Northern Ireland

December 1, 2014

As energy prices increase and the average family in Northern Ireland continues to experience a tightening of its disposable income, it is not surprising that individuals and businesses alike have started to investigate means of reducing their energy costs. This, coupled with the perceived availability of Government grants and the perceived reductions to one’s carbon footprint, means that the roof tops of Northern Ireland are starting to change in appearance.

The advancements of solar panels, mounted wind turbines, heat exchange systems and ground-source heat pumps should encourage all parties – suppliers, installers and owner occupiers – to pause for thought and ensure that they are best protecting their interests during their green crusade.

EXAMPLE

Company X has contracted with homeowner Y or business Z to install solar panels to its residential or commercial premises. The usual arrangement involves the end customer entering into a lease which gives the supplier the right to install its own product on the premises. That product may be solar panels, wind turbines or other energy saving devices. The product remains the property of the supplier, whilst the energy produced and the revenue generated from it is usually shared with the end customer.

There are, however, a few potential issues for all parties involved. Whilst this matter is yet to be tested in our courts, it may be safe to presume that an agreement between the owner of the premises and the supplier of the product would be protected by the Business Tenancies (NI) Order 1996. If this is tested and the courts accept the above to be the case, the supplier of the product will, in effect, have security of tenure. This would mean that each time the lease came to an end, the supplier would be entitled to apply for a fresh lease and the owner of the premises could only defeat that application if they fell within one of the exceptions in the legislation. For example, if they were intending to redevelop the lands and required possession of the same for that purpose.

The Northern Irish position differs to that in other jurisdictions in that the tenant, here the supplier of the product, cannot contract out of the security offered by the legislation. For this very reason, suppliers and the owners of premises may find that mortgage providers in Northern Ireland will be more reluctant to allow the owner of the premises to enter into such arrangements.

IMPLICATIONS

Equally, the supplier of the product should be careful to consider how the owner of the premises legally holds the same. If theowner holds his premises under a long lease, he will enviably be subject to various covenants and conditions. If he were to breach those, his ultimate landlord may be entitled to forfeit the lease. If the head lease is forfeited, then the sub-lease to the energy supplier will equally be brought to an end.

The above are only two of a series of examples of situations which may arise within this jurisdiction. If you are an energy supplier or if you are the owner of a premises and you are considering the installation of an energy-saving scheme, I would strongly encourage you, from the outset, to take legal advice which is specific to the legal jurisdiction in which you operate.

For more information, contact Aaron Moore at Cleaver Fulton Rankin, telephone 028 9024 3141, e-mail info@cfrlaw.co.uk or visit the website at www.cfrlaw.co.uk

PLEASE NOTE THAT THE CONTENT OF THIS ARTICLE IS FOR INFORMATION PURPOSES ONLY AND FURTHER ADVICE SHOULD BE SOUGHT FROM A PROFESSIONAL ADVISOR.