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UK: Proposed changes to the replacement of generating equipment under operators on the FIT Scheme

  • United Kingdom
  • Energy and infrastructure - Clean energy

20-07-2021

On 7 July 2021, Ofgem published a consultation on its proposed changes to the replacement of generating equipment at a FIT installation and how it may affect the operator’s accreditation. The response deadline for providing any comments or feedback in response to the proposals in the consultation is 4 August 2021.

Ben Brown, Principal Associate, comments: The consultation will hopefully lead to some much needed clarity in a growing area of interest for asset owners, namely repowering and maximising the value of their portfolios. But there remain areas where further clarity would be appreciated, such as express guidance on repowering.

Set out below are the key proposed changes. Currently, Ofgem have not provided a proposed implementation date for any of these proposals.

Ofgem’s reasons behind the proposed approach

Previously Ofgem had assessed the repair or replacement of equipment at a FIT installation on a case-by-case basis. FIT operators were therefor unclear on how their repair or replacement of equipment would be treated in advance of taking action. Ofgem recognises that with the closure of the FIT scheme in 2019, the risks the scheme and participants in the scheme face, differ from closure to pre-closure. Ofgem now seeks to clarify repairing and replacing of equipment in the context of maintaining or ending a FIT operator’s accreditation.

Replacing generating equipment

Ofgem have proposed a two-limb assessment for licensees to determine whether a change to an installation would then affect it’s potential accreditation, which are as follows:

  • Have all components of the accredited FIT installation been replaced
  • Do the changes affect the installation’s generating capacity

If the answer to both of the above are no, then Ofgem considers that the installation’s FIT accreditation will not be impacted. Also, if all parts of the accredited FIT installation are removed or replaced then “the installation will be seen as decommissioned” and will lose accreditation. Ofgem have said that the repair or replacement of “isolated components” which does not affect capacity should not affect the installation’s accreditation. However, it is unclear at what point the replacement of “isolated components” could become “all components”.

Additionally, Ofgem have recognised that unintentional decommissioning of an installation (e.g. via an Act of God), can occur, which would end the accreditation of that installation. Relocation of an installation to another site, will also end that installation’s accreditation.

Scope of installations

Ofgem are seeking to clarify and broaden their interpretation of the scope of plant within the meaning of “FIT installation” or “Eligible Installation”. Currently, Ofgem’s approach is to treat the Eligible Installation as the generating equipment alone (i.e. not any cable routes or wiring away from or to the generating equipment). The proposed approach takes into account all parts of an installation, “up to the point of grid connection”, which could include such cable routes. We would like to see further clarity on how this will be applied in the context above, i.e. what is required for “all components” of the FIT installation to be considered to be replaced such that it is decommissioned (e.g. where solar panels are replaced by the cabling is not).

Updated guidance

Ofgem have provided the proposed text for updated guidance, including some examples, which is a welcome development. Again there are certain areas where more clarity would be useful. For instance, Ofgem gives the following example that would be within the scheme rules, but it is not clear in this example how the capacity (TIC) could be changed without affecting accreditation:

“Addition, removal or replacement of PV panels:

  • The TIC and/or generating equipment has changed, therefore the generator needs to notify Ofgem and their licensee
  • Accreditation continues”

Another example demonstrates the uncertainty of the “all plant decommissioning” rule above (i.e. if not all plant is decommissioned, can accreditation continue):

“Decommissioning of generating equipment and all other plant on site indirectly related to the generation of renewable electricity:

  • The accredited installation ceases to exist, therefore the generator needs to notify Ofgem and their licensee
  • Accreditation ends”

We are planning to submit a response to seek clarification on these points and others, and would welcome any input or feedback from other stakeholders.