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commercial means by providing eligible generators with a guaranteed ‘ back-stop ’ route-to-market at a specified discount to the market price .
■ Green Gas Support Scheme ( GGSS ): the GGSS provides financial incentives for new anaerobic digestion biomethane plants to increase the proportion of green gas in the gas grid . Participants will receive quarterly payments over a period of 15 years , based on the amount of eligible biomethane that a participant injects into the gas grid . The GGSS is open to applicants for four years from 30 November 2021 .
3.3 What are the main sources of financing for the development of utility-scale renewable power projects ?
In recent years the offshore wind sector represented the primary source of financing activity for utility scale renewable projects in the UK . In recent years , a low interest rate environment coupled with a large number of lenders looking to participate in this sector has provided project developers with favourable conditions to finance their projects . However , interest rate rises coupled with inflationary pressures have made for a less benign climate to finance large scale infrastructure projects . To date , the main source of debt financing has been commercial banks ; however , we have seen participation from export credit agencies and also new entrants to the market such as pension funds and infrastructure investors . A new development in the market has been the limited recourse financing of battery storage projects , although the ( relatively ) small scale of these projects combined with the lack of ‘ bankable ’ long-term offtake solutions has impacted the commercial banks ’ appetite to finance these assets . We have recently been involved in the financing of co-located battery storage projects alongside existing solar projects and we expect there to be a number of these types of financings as developers seek to leverage existing grid connections .
3.4 What is the legal and regulatory framework applicable to distributed / C & I renewable energy ?
Distributed and C & I renewable energy facilities are generally subject to the same legal and regulatory framework as utility-scale renewable energy facilities with respect to the sale of electricity , participation in the wholesale market and connection to distribution and transmission networks , save that there are exemptions from licensing requirements under the Electricity Act for particularly small facilities .
3.5 Are there financial or regulatory incentives available to promote investment in distributed / C & I renewable energy facilities ?
Available incentives include :
■ Feed-in Tariffs ( FiT ): the FiT scheme supports investment in small-scale renewable and low-carbon electricity generation projects up to 5MW capacity . It offers long-term support to projects and provides generation and export tariffs based on the costs of generation for the following technologies : solar PV ; onshore wind power ; hydropower ; anaerobic digestion ; and micro combined heat and power ( up to 2kW ). The FiT scheme closed to new entrants on 31 March 2019 but continues to support existing generation for up to 25 years .
■ Smart Export Guarantee ( SEG ): following the closure of the FiT scheme to new installations , supplier-led SEG was introduced on 1 January 2020 . Under the SEG , licensed electricity suppliers ( with 150,000 domestic customers or more ) are required to offer small-scale low-carbon generators a price per kWh for electricity exported to the National Grid . Remuneration is available to solar PV , wind , anaerobic digestion and hydro generators of up to 5MW in capacity , and micro combined heat and power installations up to 50kW . Mandated suppliers are required to provide at least one SEG-compliant tariff . They are free to determine the price and length of the contract , provided that remuneration is greater than zero at all times .
3.6 What are the main sources of financing for the development of distributed / C & I renewable energy facilities ?
The majority of smaller-scale distributed and C & I renewable energy facilities have been financed on a balance sheet ; however , project finance has grown in importance for investments in this sector . To date , the majority of this project finance debt has been provided by commercial banks , either on a standalone project or portfolio basis .
3.7 What is the legal and regulatory framework applicable to the development of green hydrogen projects ?
Currently , there is no regulatory regime in the UK ( or England & Wales in particular ) specifically tailored to hydrogen . Existing regulations pre-date the advent of hydrogen as a viable commercial energy source . However , in August 2021 , the government published a hydrogen strategy and subsequent supporting materials including , in April 2022 , the Hydrogen Investor Roadmap , which prioritises working with the government and regulators to deliver a robust regulatory framework for the hydrogen industry .
The Energy Security Bill also introduces a state-of-the-art business model for hydrogen projects and aims to enable the delivery of a large village hydrogen heating trial by 2025 to inform the government ’ s decision on the role of hydrogen in the UK ’ s heat decarbonisation .
However , the current regulations applicable to hydrogen projects consist of a mixture of more general energy regulations . As hydrogen is a gas , it is regulated by Ofgem as part of the gas network under the Gas Act 1986 . These regulations include the requirement for a licence to transport or supply hydrogen . Gas licensees must comply with a breadth of industry codes and detailed health and safety regulations .
3.8 Are there financial or regulatory incentives available to promote investment in green hydrogen projects ?
As described in question 3.7 , the regulatory incentives for hydrogen are currently under development . As to other financial incentives , the Ten Point Plan sets out the government ’ s commitment to a £ 240 million Net Zero Hydrogen Fund for the development and deployment of new low-carbon hydrogen production to de-risk investment and reduce lifetime costs . In June 2023 , the government announced £ 80 million of grants to industrial businesses to fund switching to low-carbon fuels , such as hydrogen , and to developers turning biomass and waste into hydrogen production , with carbon capture .
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Renewable Energy 2024