Ofgem feed-in tariff update: new opportunities for existing energy schemes

In June 2021, Ofgem wrote to stakeholders to get their views on how the replacement of generating equipment for eligible FIT schemes should be determined going forward.

This came about as a result of the increasing number of queries both from FIT generators as well as wider industry stakeholders, who wanted to understand how certain changes, maintenance or replacement of generating equipment may affect the accreditation of FIT installations going forwards. In December 2021, Ofgem confirmed that they had taken the feedback on board and made changes to the scheme policy accordingly. 

Ofgem had initially adopted a risk-based approach whereby changes to any FIT installations were assessed on a case-by-case basis. If all generating equipment directly relating to the installation was replaced or removed, the FIT support would have ceased, allowing Ofgem to safeguard against fraud and deliver the scheme efficiently. However, Ofgem has since recognised that the risks that exist today are different to those that existed in the early stages of the scheme, and as the average age of FIT installations begins to increase, the likelihood of equipment needing replacing or repairing also increases. 

Ofgem reaffirmed that: 

• The duration of the FIT payment now may well be greater than the life expectancy of generating equipment 
  
  
• As the average age of FIT accredited installations increases, so does the likelihood of repair and need for replacement 
  
  
• Where generating equipment may be damaged or has malfunctioned, it may be necessary to replace equipment to ensure safe and efficient generation 
  
  
• FIT accredited generating equipment varies depending on technology types, some of which comprise multiple components and others can be one containerised component 
  
  
• Since the scheme came to an end in April 2019, accreditation has been withdrawn due to replacement equipment and a new application could no longer be made. 

Ofgem’s change in direction will offer a proportionate level of security to FIT generator for the remaining duration of their eligibility period. The definition of ‘Eligible Installation’ which initially only covered the ‘generating equipment’ will now be opened up to take into account all plant components that make up the FIT equipment. This means that all parts of any FIT installation up to the point of grid connection are considered accredited. 

The scheme will continue to run in line with the FIT Order and the Supply License Conditions, whilst allowing FIT generators to carry out necessary maintenance works. However, it should be noted that breaching scheme rules can still result in the withdrawal of FIT accreditation. This includes but is not limited to, instances where a FIT installation is decommissioned, relocated, no longer reliant on an eligible low-carbon energy source. Any modifications would still be reviewed on a case-by-case basis and need to be justified, and FIT generators will not be penalised for the use of improved technology or replacements in the instance that previous technology and/or components are no longer available.  

This brings about another key change, to the capacity of the technology. Modifications to the total installed capacity are now permitted, whilst still retaining FIT accreditation, provided that the total installed capacity (TIC) and any additional capacity does not exceed 5MW. The extension will not be eligible to receive FIT payments however does present the opportunity for an additional revenue stream. Ofgem and the FIT licensee must be notified and, in cases where generation and export meters are shared, payments will have to be prorated accordingly but it is thought that this may be of interest to FIT generators. 

If you are looking to upgrade your existing FIT technology and would like to discuss the possibilities of extending your generation capacity in further detail, please contact Shafk Malik via shafk.malik@carterjonas.co.uk.  

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