Providers hoping to get feed-in tariff revenue should be aware of rules governing how solar panels can be funded, says lawyer Alison Deighton
Registered providers who are installing solar photovoltaic panels using funding either from the National Affordable Housing Programme or the Affordable Homes Programme (both referred to as AHP in this article) need to be aware of rules that prohibit double funding.
This effectively means that AHP funding cannot be used to fund costs of installing PV panels if registered providers also wish to benefit from the feed-in tariff. However this is a complex issue and registered providers should be aware that this does not necessarily mean that the building as a whole cannot benefit from AHP funding but simply that costs associated with the PV installation must not be funded through the AHP.
The FIT regulations specify that FITs may not be claimed if public funds (which include AHP funding) have been used to fund the costs of purchasing or installing of PV panels. This is because the FIT scheme constitutes state aid, which under EU laws is only permitted to be granted in certain circumstances. The UK government notified the European Commission about the FIT scheme and the European Commission approved the scheme provided that the UK Government ensures that there is no element of double funding from public resources.
This means that registered providers, who are using AHP funding to build new homes and are including PV panels, need to take care to ensure that AHP funding is not used to fund the PV elements of the build. If AHP funding has been used to fund the purchase or installation of PV panels, it will still be possible to claim FITs, if the part of the grant relating to the PV installation is repaid to the Homes & Communities Agency.
The HCA issued a guidance note on this issue last year, confirming that: ‘Where grant is allocated… upon the condition that an investment partner achieves higher code for sustainable homes assessment levels, and micro generation measures are to be installed, then it is likely that such installation will not be eligible for FIT unless the element of the grant relating to such installation is repaid…’
If a provider has received AHP funding for a particular project and also wishes to benefit from FITs, then it will be necessary to repay the element of the HCA grant relating to the relevant PV installation. If the AHP funding application specified how much of the funds would be spent on the PV installation, then this would be the amount that should be repaid. If the funding application did not split out costs that would be allocated to the PV installation, then it will be necessary to calculate these installation costs as a percentage of the total build costs for which AHP funding was sought. The relevant percentage of the AHP grant would then need to be repaid.
It is worth noting that there are exceptions to the prohibition on double-funding from public resources for certain historic installations. In particular, the following types of installations are permitted to receive both FITs and publicly funded grants:
- Any installation that was commissioned on a residential building between 15 July 2009 and 31 March 2010 and for which a grant was paid before 1 April 2010;
- Installations that were commissioned before 1 October 2011 where grants were made before 1 July 2011 and where the payment of FITs complies with the European Commission’s de minimis regulation.
The de minimis regulation permits organisations to receive up to €200,000 of de minimis public funding in any three financial years. In order to benefit from the regulation, providers will need to be able to demonstrate that total de minimis funding will not exceed €200,000 during any rolling three year period during which FITs will be claimed.
Going forward registered providers applying for AHP funding should make it absolutely clear that they do not include any PV installation costs. It will also be important to ensure that any AHP funding received is ring fenced and is not used to pay for PV installations.
Alison Deighton is a partner and specialist commercial lawyer at national law firm TLT. For more information please contact Alison Deighton on 0117 917 8016 or alison.deighton@TLTsolicitors.com. Visit www.TLTsolicitors.com.