Long awaited guidance from Ofgem on the co-location of electricity storage facilities with RO or FIT accredited renewable energy installations has finally been published in a draft form for consultation.
There has been much discussion about the potential benefits of co-location projects of this kind (read the Energy Storage: The Next Wave report by Regen) but concern over the potential impact on existing RO or FIT accreditation arrangements has been one of the major perceived barriers to projects actually progressing.
The draft guidance helpfully builds on previous Ofgem statements indicating that in principle storage can be deployed on a co-located basis without invalidating the existing accreditation of the relevant RO generation station or FIT installation. It is also clear, as expected, that a key requirement here is for an appropriate metering solution to be in place to ensure there is no risk of RO or FIT support being claimed on electricity not actually generated by the relevant renewable energy installation e.g. on electricity separately imported by the storage facility from the grid. Example scenarios set out in the draft guidance of what metering arrangements will and will not be acceptable for these purposes will need careful analysis by developers of co-located projects.
Some other points of detail to note from the draft guidance are as follows:
- There is passing reference to the interaction between RO/FIT schemes and the Capacity Market, but no detailed guidance. Given the potential interest on some co-located projects in securing capacity agreements to provide an additional layer of revenue for the project, it would be helpful if further guidance was forthcoming here – ideally in the form of joint guidance endorsed by both Ofgem and National Grid.
- On FIT projects, Ofgem indicates that, unlike the RO scheme, the use of multiple meters to calculate net "renewable" export is not permitted. Without the right metering arrangements being in place, there is a risk therefore that the owner of an existing FIT installation would – following deployment of co-located storage – cease to be eligible to claim FIT export tariff payments and would only be able to secure revenue in relation to electricity exported to the grid via a commercially negotiated PPA i.e. the installation would effectively be treated as having permanently opted-out of receiving export tariff payments.
- The draft guidance confirms that, as a matter of process, Ofgem will only determine the acceptability of particular changes to an existing RO or FIT installation once those changes have been made. Other guidance from Ofgem indicates that scope may exist to reverse a change if determined to have an adverse impact on an existing accreditation. However, some owners and funders of existing projects might find it helpful for Ofgem to expand on this point in the specific co-location guidance and provide extra reassurance that, even if a particular co-located storage arrangement is not acceptable to Ofgem, existing accreditation will not be lost for good if that storage is disconnected and the original RO or FIT installation returned to its previous metering configuration.
The closing date for providing comments on the draft guidance is 8 February 2018.
Contributor: Stuart Urquhart
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