UK: Ofgem draft guidance for generators: Co-location of electricity storage

21 December 2017

Elizabeth Reid, Andrew Renton, Joshua Partridge

Ofgem released draft guidance on Thursday 14th December which seeks to clarify existing guidance documents on the requirements that generators must satisfy under the Renewables Obligation (RO) and Feed-in Tariff (FIT) Schemes if storage is co-located with generation. No new policy has been introduced by the draft guidance. There is an eight week period during which Ofgem is inviting specific feedback on certain issues: (i) what improvements could be made and what omissions need to be clarified; (ii) the use of bi-directional meters; and (iii) the likely uptake of co-location of storage.

Co-location of electricity storage facilities with renewable generation supported under the Renewables Obligation or Feed-in Tariff schemes
No change to RO and FIT scheme requirements

The guidance addresses the treatment of storage facilities co-located with accredited renewable generation within the RO and FIT legislative framework.[1] Where the requirements of the respective scheme are met, storage can be deployed without affecting the validity of the RO or FIT accreditation. However, there may be scenarios where co-locating storage impacts on the eligibility of an accredited facility. Ofgem lists the following as overarching principles:

  1. Co-located storage does not change generators' obligations to comply with the RO and FIT scheme requirements
  2. Generators will only receive support for eligible renewable electricity generated by an accredited RO generating station or FIT installation
  3. Installing storage will not alter the Total Installed Capacity of the RO generating station or FIT installation
  4. The schemes' eligibility requirements are not changed by the type of storage technology.

The guidance lays out a number of scenarios for storage co-location configuration on RO and FIT accredited stations, including helpful diagrams demonstrating metering set-ups that satisfy the key requirements of the relevant schemes.

RO and FIT support only for eligible electricity

Regardless of the type of technology used for storage, only electricity generated by the accredited installation is eligible for support under the RO and FIT schemes. Although configurations for co-located storage will be assessed on a case by case basis, in most cases, co-located storage will not be considered part of the RO or FIT generating installation and is not anticipated to affect the total installed or declared net capacity. Generators must ensure that electricity from ineligible sources does not impact the meter reading for the accredited installation.

Co-locating storage with RO accredited generation stations

Private wire supply

A generator may claim Renewables Obligation Certificates (ROCs) for electricity supplied to a third party storage facility by private wire. The generator must demonstrate that the supply satisfies the private wire criteria under the respective scheme legislation as well as evidencing that:

  • A private wire arrangement is in place;
  • A power purchase agreement is in place;
  • The electricity is supplied to the premises; and
  • The generator is exempt from holding an electricity supplier licence and one of the licence exemptions can be identified.

Notifying changes to a RO generation station

The addition of a co-located storage installation to an accredited generation station under the RO is a change that must be reported to Ofgem as it may impact on how ROCs are claimed or how fuel is used. This notification must take place within two weeks of the change through the Register as outlined in the RO Guidance for Generators.

Co-locating storage with FIT accredited installations

The guidance provides two ways to satisfy FIT requirements for generation payments to be made:

  1. If the storage facility can only be charged by the FIT installation, or the storage meter is installed after the generation meter, then the meter only measures accredited FIT generation; or
  2. The generation meter must be capable of measuring the electricity generated by the accredited FIT installation only.

If the generator cannot satisfy Ofgem that the meter reading reflects only eligible electricity under the FIT scheme, the generator will not be entitled to payments. This applies to both deemed export and metered export payments.

Notifying changes to an accredited FIT installation

Co-locating storage with a FIT installation should be reported to the FIT Licensee or as an amendment to the ROO-FIT accreditation application as appropriate.

Conclusion

Co-location of storage in the context of an intermittent source of generation is seen by many in the industry as an inevitable development in due course. Maybe because of this there are currently few incentives directed at co-location installations.  An accredited installation that benefits from a long-term revenue stream has been seen by some as a risky move in the context of regulatory uncertainty but there is also a school of thought that the additional revenue streams available enhance the business case viability. The guidance does not represent an exhaustive list of scenarios and makes clear that each case will be judged on its merits against the relevant legislative framework. While this is helpful and demonstrates Ofgem's willingness to open up the market to the potential of storage alongside renewables, it remains as important as ever to assess each potential co-location  installation in detail to ensure any existing accreditation is not jeopardised and future assumed revenues can be achieved.