Tariff Guarantee extension to at least mid-March 2021 due to COVID-19 project delays
Posted on 30 Apr, 2020 by Sam Hinton
March 2021 extension of commissioning deadlines for projects currently holding a TG and the third allocation of flexible TGs - changes to RHI Support and COVID-19 response (28th April 2020)
Further to the proposals outlined in the Budget, the Government intend to bring forward legislation to extend the commissioning deadline for projects currently holding a Tariff Guarantee (TG), to grant these projects additional time to fully commission in light of delays caused by COVID-19. Full Government post can be found here.
Extension of commissioning deadlines for projects currently holding a Tariff Guarantee to at least mid-March 2021
Currently projects with existing TGs under the 2nd allocation have a commissioning deadline of either 31st January 2021 or 183-days after the commissioning date that they have stated to Ofgem (the scheme administrator) in their application, whichever is earlier. The legislation that the Department for Business, Energy and Industrial Strategy (BEIS) intend to bring forward would push all of these commissioning deadlines back to at least mid-March 2021. This measure would give all current TG projects a minimum of an additional 6 or 7 weeks to commission, with a significant number being afforded far more additional build time due to commissioning deadlines prior to 31st January 2021. Further details on the specific commissioning deadline and details of this extension will be released with the Government Response to this notice.
BEIS are also undertaking work to ensure that the transition between TG allocations is as smooth as possible so that projects that are unable to meet the extended commissioning deadline are able to easily apply for the third flexible allocation of TGs. The introduction of this flexible allocation of TGs will have the additional benefit of allowing eligible projects to commission after the closure of the Non-Domestic RHI (NDRHI), easing the burden being placed on projects by delays caused by COVID-19.
Third allocation of flexible TGs to the NDRHI
Chancellor’s Budget announced the government’s intention to introduce a third allocation of flexible TGs to the NDRHI. This new allocation of TGs will require plant to have submitted Stage 2 information evidencing financial close prior to the closure of the NDRHI to new applicants on 31st March 2021.
Previous TG allocations have made provision for a deadline date, by which point a plant must have commissioned and a properly made application submitted to receive the secured tariff. Under the new allocation, a plant will be required to submit properly made Stage 2 information prior to scheme close on 31st March 2021, but will be able to set a date for submission of Stage 3 commissioning evidence up to 31st March 2022, in keeping with current TG rules.
Under the new allocation, payments will begin from the point of commission and end 20 years after the properly made submission of a plant’s Stage 2 information.
For example, for a plant that submits Stage 2 information on 28th February 2021, has a tariff granted on 20th April 2021 and commissions on 28th February 2022, the payment period would begin from 28th February 2021 and this plant would receive nineteen years of payments from the point of commissioning.
The NDRHI scheme will close as scheduled to new applications on 31st March 2021.
No NDRHI payments will be made after 31st March 2041.
The Department also intends to set new TG budget headrooms for the 2021/22 and 2022/23 financial years. For more information, see Ofgem’s guidance on budget headrooms for previous TG allocations.
For the purposes of this flexible third allocation, we are considering setting headrooms for individual technologies, or groups of technologies, and these will be announced alongside the government response to this notice.
For more information visit Ofgem’s current guidance on TG eligibility and process.
For more information please contact the ADBA team.
