Lottery grants and FITs

[BruceB]

If you get a Lottery grant for a PV installation can you still claim the FIT?

I think the answer is yes, but it is not clear cut from what I have read so far. Has anyone seen a clear answer from OFGEM or others on this?

 

[Worcester]

The reason for rasing the question was that one of our customers got part lottery funding to install, and the FiT provider has hinted / asked variuos questions inplying it might not be elegible.

Heres what was sent to them:

We have noticed on your application form that you have received a grant. Ofgem have strict criteria on eligibility if a grant has been received so we would be grateful if you could consult the following link to confirm that you meet the relevant criteria for eligibility:

Grants

If you do not meet the requirements, there are two options.

1. If the grant has been awarded but not actually been claimed and paid, you could elect not to claim the grant and this would mean the installation is eligible for FiT.
2. If the grant has been claimed and paid, it would need to be paid back to be eligible for FiT. We will require confirmation that this has been done.

Please let us know which option you would prefer to take and we will provide guidance on what the next steps are.

Note that the actutal link from Ofgem's site is out of date - the words are correct, the link is wrong!

The test is 'Public Money' and there is conflicting evidence on this.

Here's the bit from the Feed in Tariff Legislation
The Feed-in Tariffs (Specified Maximum Capacity and Functions) (Amendment) Order 2011

(3) Subject to paragraph (4), the Authority must not accredit an eligible installation as an accredited FIT installation unless the FIT generator has given notice to the Authority that—
(a)no grant from public funds has been made in respect of any of the costs of purchasing or installing the installation; or
(b)where any such grant has been made, the grant has been repaid to the person or authority which made it.
(4) Paragraph (3) does not prohibit the Authority from accrediting an eligible installation where a grant referred to in paragraph (3) has been made and not repaid if the grant is—
(a)a permitted grant; or
(b)a grant other than a permitted grant to which the conditions in paragraph (5) apply.
(5) The conditions referred to in paragraph 4(b) are that—
(a)the grant is made before 1st July 2011;
(b)the installation is first commissioned before 1st October 2011; and
(c)the Authority is satisfied that the making of FIT payments in respect of the installation would be in accordance with a de minimis Commission Regulation.

it goes on to say:

“grant from public funds” means a grant made by a public authority or by any person distributing funds on behalf of a public authority;

Subsequent ammendmenst haven't changed this Article


Ofgem / MCS give no guidance.

Awards for all (lottery funded via BIGLotteryFund) list reneables energy schemes as fundable on their site.

In found this to my dismay:
LOSTWITHIEL TODAY | NEWS | Solar blow for memorial hall | 2012

however the Governments own Department for Business Innovation and Skills
under the FAQ Frequently Asked Questions | Policies | BIS says "A: Lottery funding is not regarded as public sector funding so can be counted toward the private sector contribution to a project"

However links to two other documents on their site point to possibly a different interpretation:
11-1040-state-aid-guide.pdf (application/pdf Object) (page 3)
and
http://www.bis.gov.uk/files/file32879.pdf Item 15 page 6

GavinA gave me this link earlier, which gave me some hope:
Wessex Renewable Energy - Solar Panel Installation | Heat Pump Installation | PV Installer | Renewable Energy Systems

HOWEVER, in this case the government DOESN'T decide which PROJECTS get the funding...

OK, So I've dug a bit deeper:
This document lists 'Public Authorities'
Freedom of Information Act 2000 (Schedule 1)

And it lists 'The Big Lottery Fund' for the purposes of the FoI Act, so is 'Awards' For All considered a seperate entity from 'The Big Lottery Fund'? Does it matter?

So muddy water at present, hopefull someone can clear it up - Please?

 

[SolarCity]

In found this to my dismay:
LOSTWITHIEL TODAY | NEWS | Solar blow for memorial hall | 2012

I actually priced for this job. I nearly fell off my chair when I read the link.

 

[finchy]

Surely if you don't tick the box based on your interpretation. Would they find out and if they did how would they argue the case at least the end result might be better guidance. Obviously speak to the client first its worth it. lottery is private money, it's not based on a tax !

 

[BruceB]

Thanks Worcester for finding those links. I'll offer my take on it. I should add that the specific example I am considering is for a CoE church in England.

The starting point for FITs is this legislation: The Feed-in Tariffs (Specified Maximum Capacity and Functions) (Amendment) Order 2011.
In para 3 it says no grant must be made from public funds.
So is a lottery grant a 'grant from public funds'? Originally I thought not, but on reading further in that legislation the definitions and the references, the reason for the prohibition is that the Government must not fall foul of the European State Aid regulations. In this it appears that the EU takes a wide view of what constitutes 'state aid' and in this context the BIS advice seems to be that lottery funding is 'state aid'.

So in looking to find how a lottery grant could be allowed:
- Is it a permitted grant in terms of paras 4a and 6?
Not under the time defintion in 6a.
Perhaps it could be argued under 6b where there are additional costs because it is a listed building which you are trying to protect, hence avoiding 'environmental harm'. But a bit tenuous.

The best hope I can see is that it falls under the de minimus exception described in para 5c.

I tried reading the European legislation but it was too much to get my head around this morning. I did see some BIS guidance yesterday, Worcester has linked to some of it above.
It seems to me looking here http://www.bis.gov.uk/assets/BISCore/business-law/docs/S/11-1040-state-aid-guide.pdf
that a lottery grant would fall either within the de minimus limit of 200,000 Euros described, or you just argue that a church would not affect intra/inter state trade and hence de minimus.

The difficulty might be that rather like the TIC/DNC/kWp issue, the energy companies can do what they like on an individual project and unless the person affected has the time, money and enthusiasm to take them ultimately to court then it is unlikely to get properly tested.

This to my mind is exactly the sort of issue that OFGEM should be issuing helpful guidance on, which supports consumers and other organisations, coordinating inputs from other Government Departments, and doing so in a way that does not gold-plate the European rules to our disadvantage.

 

[Gavin A]

Lottery funding classes as state aid when being used for matched funding for eg European funding applications, therefore it will class as state aid for this purpose if a court ruling was needed, whatever DECC or ofgem might or might not say if they say different - ignore them, they're utterly clueless and will just change their mind and deny ever having issued any such advice anyway. This doesn't apply if it's a loan made at commercial rates of interest (which is partly why carbon trust is now charging 8% interest on their loans, which now don't conflict with FITs, RHI etc), but lottery is usually grants.

Where we have had this situation though, it turned out that none of the energy companies approached actually had a clue about how to handle it, and couldn't work out how to pay export without paying FIT, so have ended up paying FIT anyway despite being told by the customer that they didn't think they were eligible.