Feed-in Tariff Scheme and Grants
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 is generally not possible for a generator who has received a grant from a public funds (or a body distributing funds on behalf of a public body) in support of the purchase and/or installation of an installation 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 limited circumstances where an installation owner may be eligible to receive FIT payments despite having received a grant from public funds.
The exemptions are as follows:
1. Permitted grants
A grant from public funds is a ‘permitted grant’ where the offer of the grant was accepted:
- 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.
Where it is evidenced that 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 eligible to receive FITs payments without having to repay the grant provided:
- the grant was ‘made’ (ie the offer of the grant is accepted) before 1 July 2011,
- the installation was first commissioned before 1 October 2011, and
- the making of FIT payments in respect of the installation would be in accordance with a de minimis Commission Regulation
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 the de minimis regulations is available on the UK government website. 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 Ofgem on request by emailing: ROOFIT@Ofgem.gov.uk
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.
To find out more about renewable electricity generation and how to join the FIT scheme, your initial point of contact should be the Energy Saving Trust which can be contacted on 0300 123 1234 (England and Wales) or 0800 512 012 (Scotland).
If you have any questions relating to Ofgem’s administration of the grants element of FITs, please email: ROOFIT@ofgem.gov.uk
(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. Undertakings active in the coal or aquaculture sectors cannot receive de minimis aid.