Ofgem seeks to facilitate co-location of storage with renewables

United Kingdom

On 14 December 2017, Ofgem published its “Draft Guidance for generators: Co-location of electricity storage facilities with renewable generation supported under the Renewables Obligation or Feed-in Tariff schemes” (the “Draft Guidance”). As Ofgem makes clear in its covering letter, the Draft Guidance does not introduce new policy, rather it is intended to provide further detail and clarification of how the installation of storage on existing accredited sites will be treated under the Renewables Obligation (“RO”) and the Feed-in Tariff (“FiT”) schemes (the “Schemes”).

Background

There is significant potential for the co-location of storage with existing renewables projects, which Ofgem defines as storage that is located with or linked to a renewables project where at least some of electricity produced by the renewables project is used to charge the storage device. However, storage is neither prohibited or expressly provided for in either of the Schemes’ legislation. As a result, it has not been clear to developers and investors how such changes to existing projects would be treated. In March 2017, Ofgem updated its RO Guidance for Generators to provide further information in relation to the amendment of RO accreditations and the Smart Systems and Flexibility Plan published in Summer 2017 (summarised here) indicated that Ofgem would be publishing the Draft Guidance in relation to both Schemes.

Key Principles for both Schemes

The Draft Guidance emphasises that where the requirements of the Schemes continue to be met, storage can be deployed without impacting the relevant accreditation. Such co-located storage must meet the following key principles:

  1. No change in obligations: Co-located storage does not change generators’ obligations to comply with the Scheme requirements.
  2. Support only in relation to renewable generation: Generators will only receive support for eligible renewable electricity generated by an accredited RO generating station or FiT installation. In our experience, Ofgem is concerned with storage installations that are seeking to import electricity from the wider network in particular.
  3. No increase in installed capacity: Installing storage will not alter the Total Installed Capacity of the RO generating station or FiT installation.
  4. Technology neutral: The Schemes’ eligibility requirements are not changed by different storage technology selections.

RO

The Draft Guidance emphasises that developers of co-located storages sites must:

  • ensure that the net generation from the RO generating station can be accurately measured; and
  • demonstrate that such generation is either:
  • supplied to customers in Great Britain or Northern Ireland; or
  • used in a permitted way for the purposes of the RO legislation.

The RO case studies consider a range of co-location options considering a range of variables:

  • whether owned by operator of the generating station or a third party;
  • the specific metering arrangements for both the generating station and the storage device;
  • whether the storage device imports electricity from the wider network; and
  • different permitted ways that may be applicable e.g. on-site usage and private wire supply.

FiT

The Draft Guidance states that the developer of a co-located FiT installation must satisfy its ongoing metering requirements. In particular, it highlights that the FiT Scheme does not permit using multiple meters to measure any electricity imported to calculate net generation or export.

The FiT case studies consider a range of co-location options considering a range of variables:

  • the location of the storage relative to the generation and export meters and the FiT installation;
  • the generation and export meter technology;
  • whether the storage device imports electricity from the wider network; and
  • the impact on the generation payments and export payments by such technical arrangements.

Process for notifying changes to accreditations

Installation of co-located storage is a change to the generating station or installation that needs to be notified to Ofgem, or for smaller-scale FiT installations, the relevant FiT licensee. The Draft Guidance makes clear that generators will need to apply to amend their accreditation and provide additional evidence and information (such as single line diagrams) to ensure that the relevant authority is satisfied that the project is still eligible for support under the relevant Scheme. However, the Draft Guidance states that each project will be considered on a case-by-case basis and reiterates that Ofgem is unable to provide any assurance of proposed schemes prior to installation. Ofgem also notes a number of other points for developers and investors to consider, including that:

  • depending on the configurations, the amount of support received may decrease; and
  • the same generating capacity cannot receive support under the RO and the Capacity Market. As a result, if a Capacity Market Revenue stream is being sought by the storage device, these arrangements need to be carefully considered.
 What next?

The Draft Guidance is open for stakeholder comment until 8 February 2018. The cover letter sets out a number of specific questions for stakeholders to consider and also seeks to ascertain the scale of the potential interest from those considering co-locating storage with renewable generation.