LECs Removed From Renewable Generators

The most recent budget announced that from the 1st August 2015 Levy Exemption Certificates (LECs) would no longer be available for renewable electricity generators. A LEC is worth around 0.5p/kWh for every unit of renewable electricity that is exported to the national grid.

A LEC was issued by Ofgem based on the output and export data provided by generators via the Renewables and CHP Register, and provided energy suppliers with evidence needed to demonstrate that the electricity supplied to UK business customers was Climate Change Levy (CCL) exempt.

The removal of the LECs could have a varying impact across renewable energy generators, depending on how a renewable electricity generator uses their electricity. This could equate to up to a £980 (based on 100% export at 6.5m/s) per year reduction in the income for an Endurance E3120 wind turbine, depending on whether the electricity is exported or fully used on site.

Although disappointing for renewable electricity generators, the removal of LECs demonstrates the requirement for savvy considerations to make up for the loss in LEC payments. One way may be to consider negotiating a more competitive Power Purchase Agreeemnt (PPA) with your current provider to get a better deal for the renewable electricity being generated.

For more information about how the removal of LECs may impact your existing renewable energy project, contact the LessCO~2 Limited team.