Community groups are losing Feed In Tariff (FIT) payments for their renewable energy installations, such as solar PV and wind turbines, because they have received Big Lottery Fund (BLF) grants.

Earlier this year, Pennine Community Power were in this position with their wind turbine and had to repay £8,800 to BLF, out of a £30,000 grant, in order to have their FIT payments reinstated.

Obscure State Aid rules

The Ofgem rules on State Aid are not that clear and are little known even to many so-called experts in the field.

The way it works is that you can use the BLF grant to pay for enabling work (such as planning application, grid upgrades if the Distribution Network Operator deems it necessary, costs of a share offer, etc), without losing FIT.

If you use the BLF grant to pay for the costs of the PV panels or wind turbines and their installation, you will lose the FIT.

Pennine Community Power’s experience -months of negotiation with Ofgem

Finn Jensen of Pennine Community Power has some advice for community groups in this situation. Finn said,

“I assume groups have a copy of Ofgem’s rules but if not I can email them.

To avoid losing their FIT payments, groups should use the BLF grant to pay as much of the enabling work as possible, and use other income streams to pay for the PV panels or wind turbine. If it ends up with some BLF money having gone to the purchase of the PV panels or wind turbine, you will have to repay that bit of the grant to BLF. If you do not have the money to do so, you can take out a loan (the Co-op Bank has been very willing  to help community energy projects), do a share offer (if you are registered with the Financial Conduct Authority), etc.”

Pennine Community Power issued a second share offer to raise the £8,800 for the BLF and have now got their FIT reinstated at the original level. However, it took many months of negotiations with Ofgem to come to an agreement, as they wanted to see evidence of everything, some of which Pennine Community Power had to get from the Distribution Network Operator and Big Lottery Fund.