Budget implications for renewable generation
It’s only two months since the country elected a new government and in that time we have seen considerable change for the energy market.
First, there was the announcement by Amber Rudd, Secretary of State for Energy & Climate Change, on June 17 that Onshore Wind generation would be excluded from the Renewable Obligation Scheme from April 1 2016.
Then, on Wednesday, Chancellor George Osborne announced in his budget that from August 1 2015 renewable source electricity will no longer be Climate Change Levy exempt.
Climate Change Levy (CCL) is a tax on energy delivered to non-domestic (business and public sector) users in the UK. It aims to provide an incentive to increase energy efficiency and to reduce carbon emissions.
Electricity from renewable sources is currently exempt from CCL via Levy Exemption Certificates (LECs) awarded to renewable generators for each MWh of electricity they generate.
Electricity consumers and generators alike will feel the effects of this latest announcement. EDF Energy will continue to work with all parties and Ofgem to ensure that we are fully prepared for the changes and can support our customers in the most effective manner.
What does this mean for our customers?
• From August 1 2015 renewable source LEC backed electricity will no longer be CCL exempt. There will be a transition period, during which electricity suppliers may continue to exempt renewable source electricity supplied. The specific arrangements for this transition period are to be consulted on.
• Supply customers on a ‘standard’ or ‘Blue for Business’ electricity supply - remain unaffected and will continue to pay CCL as a separate charge in their electricity bill.
• We anticipate that supply customers with Climate Change Agreements will continue to receive applicable CCL rate reductions, as there has been no announcement on this matter.
• There was no announcement in relation to CCL exemptions for charities engaged in non-commercial activities or to exemptions for ‘de minimis’ sites where the electricity provided does not exceed 1 MWh per month – so at this time we do not anticipate any changes for charities or smaller business consumers.
• The full impact for EDF Energy supply customers who have renewable source LEC-backed or ‘Renewable for Business’ electricity supply will be assessed over the coming weeks and customers will be contacted as necessary.
• Customers with a fixed + Peace of Mind contract with either standard or ‘Blue for Business’ energy will see no change to the price they pay. Fixed + Peace of Mind contracts with Blue for Business gives price certainty through our ”it’s fixed” commitment"1. Blue for Business guarantees our customers’ electricity supply is backed by low-carbon generation allowing the reporting of zero carbon emissions for the electricity they use2.
• The full impact for EDF Energy renewable export customers who have Power Purchase Agreements (PPAs) will be assessed over the coming weeks and customers will be contacted as necessary.
For further information or to discuss whether you will be impacted by the latest energy announcements from the government contact your account manager or regularly visit www.letstalkpower.com
1. Our "it's fixed" commitment
When we say an element of your price is fixed, we’re making a commitment to you that we will not use our Fixed + Peace of Mind Terms and Conditions to recover additional costs arising from our forecasting errors. But we can't plan for absolutely everything. In the case of force majeure events, or in exceptional circumstances such as a change in law relating to your energy use, we may have to pass on the costs. But we’ll always try to avoid taking that action.
2. GHG Protocol, Scope 2 Guidance, World Resources Institute & World Business Council for Sustainable Development, September 2014. Low-carbon electricity purchased for Blue is supplied into the National Grid. Blue customers receive electricity via the National Grid, not directly from low-carbon generators. Our fuel mix