Feed-in Tariff Scheme and Grants
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NOTE: This guidance is only relevant where a grant from public funds has been made in relation to the costs of purchasing or installing your installation. If a grant from public funds has not been made in relation to the costs of purchasing or installing your installation, you will be eligible to receive FITs payments as long as all other requirements are met.
This guidance sets out our procedures for the implementation of the grants provisions under the Feed-In Tariff scheme (FITs). It is intended to be working guidance and may be updated from time to time. This is guidance only. At all times, the onus is on the operator of an installation to ensure that it is aware of the requirements of the Feed-in Tariffs (Specified Maximum Capacity and Functions) Order - link opens in a new browser window, as amended (the Order). This guidance is not intended to provide comprehensive legal advice on how the Order should be interpreted. Whilst this note is intended to provide general advice on how the entitlement to FITs Payments could be affected by the receipt of public grants, developers are advised to seek their own legal advice before approaching Ofgem.
On 30 May 2011, the Department of Energy and Climate Change (DECC) enacted The Feed-in Tariffs (Specified Maximum Capacity and Functions) (Amendment) Order 2011 - link opens in a new browser window.
This document outlines the exemptions that may apply where an installation seeking accreditation for the FIT scheme has received a grant from public funds.
The FITs scheme is intended to replace public grant schemes as the principal means of incentivising small scale, low-carbon electricity generation. Because of this, and to ensure value for money for consumers and compliance with EU law on state aid, it will generally not be possible for a generator who has received a grant from a public body in support of the purchase and/or installation of generating equipment to also benefit from FITs payments.
Exemptions (instances where an installation can benefit from both FITs and a grant from a public body)
There are certain specific circumstances where an installation owner may be entitled to receive FITs, notwithstanding the receipt of a grant from a public body. These circumstances are set out in the FITs Order 2010 (as amended). Under the Order, final decisions on eligibility for FITs are the responsibility of Ofgem.
The exemptions are as follows:
1. Permitted grants
A grant from public funds is a ‘permitted grant’ (defined in Article 8 of the Order) where it was made :
- before 1 April 2010 in respect of the costs of purchasing or installing:
- an eligible installation first commissioned before 15 July 2009; or
- an eligible installation on a residential property first commissioned between 15 July 2009 and 31 March 2010; or
- in respect of reasonable additional costs of an installation to avoid or mitigate environmental harm. In order to qualify, the amount of the grant must not exceed the amount of those identified costs.
Such additional costs may include, for example, measures to protect fish and other wildlife in small hydro schemes. Additional costs associated with land acquisition or inefficient or poorly located installations would not be reasonable additional expenditure.
The costs and returns associated with photovoltaics, wind and micro CHP under FITs are relatively standardised, as installations are based on manufactured components installed in standardised ways. In the majority of cases we do not, therefore, expect that installations in these technology classes will have justifiable additional costs.
Further information on this exemption is available on request from: email@example.com
Where a grant meets the ‘permitted grant’ definition, the installation owner will be eligible to receive FITs payments and retain the grant provided all other eligibility criteria are met.
2. Compliance with the EC’s rules on de minimis aid
Where a grant is not a “permitted grant”, the recipient may still be entitled to FITs payments without having to repay the grant provided:
- the grant is made before 1 July 2011,
- the installation is first commissioned before 1 October 2011, and
- the combination of FITs and grants is in accordance with the EC de minimis regulations - link opens in a new browser window.
EC de minimis regulations explained
If the overall support to be received from public funds (grant support plus FITs payments) does not exceed thresholds specified in the de minimis regulations(1), the installation may be eligible to receive FITs payments and retain the grant, provided all other eligibility criteria are met. Further information on de minimis regulations is available on the state aid pages of the Business, Innovation and Skills (BIS) website - link opens in a new browser window.
Installation owners seeking to use this grants exemption will be required to sign a declaration confirming that:
- the total value of public financial assistance they have received in relation to any economic activities – this relates to any grants received from a public body and is not limited to grants received for the installation - has not exceeded the de minimis aid levels of support, and that the combination of the grants they have received and the maximum expected FITs payments (export and generation tariffs) will similarly not exceed the de minimis levels of support.
- they will notify Ofgem or their FITs licensee immediately if the de minimis levels of support are exceeded or if they think they are likely to be exceeded.
The declaration is available from the table at the foot of the page. If you applied for FITs accreditation from 1 April 2010-31 March 2011, the 2010/11 declaration should be signed. If you apply for FITs accreditation from 1 April 2011-31 March 2012, the 2011/12 declaration should be signed.
We have included a covering note along with the declaration. The covering note provides more details about the de minimis exemption and how to self-assess against the requirements.
A table showing the indicative income from FITs payments is also available from the declaration links at the foot of the page.
EC de minimis regulations and off-grid installations.
If a generator is off-grid and cannot export its electricity, and generates only for its own use, then it is unlikely that it will be generating electricity as an economic activity.
Where an off-grid installation is in receipt of a grant from public funds and wishes to claim FITs payments using the de minimis exemption, the owner will be required to declare that the installation:
- is not an undertaking by virtue of carrying on any other economic activity; and
- does not sell any of the electricity it generates.
Option to repay a grant
Where a grant does not meet any of the above exemptions, the grant would need to be repaid in order for the installation to be eligible for the FITs scheme. Where repayment is required, the full grant level will need to be repaid before the installation is eligible for the FITs scheme.
In the first instance, the grant issuer should be contacted to discuss repayment options.
Information on FITs is provided by the Energy Saving Trust - link opens in a new browser window, and the Carbon Trust - link opens in a new browser window.
If you have any questions relating to Ofgem’s administration of the grants element of FITs, please email: firstname.lastname@example.org
(1) In most cases this threshold is €200,000 over a period of three years. For undertakings active in the road transport sector, the de minimis threshold is €100,000 over three years. The de minimis threshold is €7,500 over three years for undertakings active in the primary production of agricultural products, and €30,000 over three years for undertakings active in the fisheries sector. See DEFRA's website for more information - link opens in a new browser window. Undertakings active in the coal or aquaculture sectors cannot receive de minimis aid. Further guidance on compliance with de minimis requirements is available on the BERR website.