Renewables Exemption
What is the CCL exemption for renewables?
On 1 April 2001, the Government introduced the Climate Change Levy (CCL) under the Finance Act 2000. It is chargeable on non-domestic supply of electricity in the United Kingdom. This is the industrial and commercial supply of taxable commodities for lighting, heating and power by consumers in industry, commerce, agriculture, public administration and other services.
Electricity is currently (with effect from 1 April 2008) subject to the Levy at a rate of £4.56/MWh (subject to certain exclusions, exemptions, reduced-rate and half-rate supplies).
The Climate Change Levy (General) Regulations 2001 provide for an exemption from CCL for renewable electricity.
The Climate Change Levy (General) (Amendments) Regulations 2003 extended the exemption to electricity produced from good quality CHP.
The Climate Change Levy (General) (Amendment) (No. 2) Regulations 2003 extended the exemption to electricity produced from coal mine methane.
What are Renewables LECs?
Renewables Levy Exemption Certificates (Renewables LECs) are electronic certificates. We issue them, monthly, to accredited generating stations, for each Megawatt/hour (MWh) of renewable source electricity. In the case of NFFO/SRO generating stations we issue LECs directly to the electricity suppliers entitled to receive them. LECs identify renewable source electricity produced by accredited renewable generating stations.
Before it can receive LECs, a generating station must apply to Ofgem for accredited status.
Renewables LECs are part of the evidence required by HM Revenue & Customs to demonstrate the amount of renewable source electricity supplied to non-domestic customers in the United Kingdom. They are used by electricity suppliers to claim the CCL Exemption on non-domestic supply. Suppliers allocate Renewables LECs to a supply pursuant to a renewable source contract.
The legislation
The relevant pieces of legislation are:
• Climate Change Levy (General) Regulations 2001 (Statutory Instrument (SI) 2001 No. 838);
• The Climate Change Levy (General) (Amendments) Regulations 2003 (SI 2003 No. 604); and
• The Climate Change Levy (General) (Amendment) (No. 2) Regulations 2003 (SI 2003 No. 2633).
This legislation is published on the Office of Public Sector Information website: www.opsi.gov.uk
What is Ofgem’s role?
We are responsible for monitoring the exemption claimed in Great Britain. Ofreg has a similar role in respect of electricity supplied in Northern Ireland.
Our responsibilities include:
• accrediting qualifying renewable generators;
• issuing Renewables LECs;
• receiving notification of the certificate number of each Renewables LEC allocated to a supply; and
• reporting those certificate numbers to HM Revenue & Customs
Associated documents
Readers should be aware of the following documents:
• Climate Change Levy exemption for renewables: Guidance for generators and suppliers;
• Monthly data templates and instructions for the submission of ROC and Renewables LEC data; and
• the annual Renewable LEC Issue Timetable.
Contacts
Rebecca Dixon, Manager CCL, REGO and NFFO
Tel: 020 7901 7409
Email: rebecca.dixon@ofgem.gov.uk
Email: renewable@ofgem.gov.uk
Monthly data email: monthlyoutputdata@ofgem.gov.uk