Climate Change Levy: Removal of exemption for electricity from renewable sources

Posted on 14 July 2015

The UK Government has announced its intention to remove the exemption from the climate change levy (CCL) for renewable electricity which is supplied to businesses. Here is Greenspan’s interpretation of the news;

What was the announcement?
George Osborne presented the Budget to the House of Commons on 8 th July 2015. He announced that the exemption for renewable sourced electricity from the CCL would be removed.

What is the CCL?
The CCL is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions.

Why does this affect generators?
Up until now, generators of renewable electricity have been awarded Levy Exemption Certificates (LECs) for the power they export. These are traded with suppliers as part of your power purchase
agreement, and suppliers then sell these LECs to businesses who can offset their CCL charges.

What does this mean for generators?
From 1 st August 2015, renewable generation will no longer receive payments for LECs. This will affect all existing and new generators.

How much is this worth?
The full value of the CCL for Apr14-Mar15 was £5.54/MWh. Renewable generators would have received a percentage of the £5.54 for their LECs, which would be defined within their PPA.

This announcement is likely to affect those claiming Renewable Obligation Certificates more so than those claiming the Feed-in-Tariff.