CCLG7820 - Exempt supplies: Electricity from renewable sources: How the renewable scheme operates

Electricity suppliers will contract with their customers to supply them with electricity from renewable sources. This may be for all or part of their consumption. If the customer is entitled to other exclusions, exemptions or reduced-rates then the exempt renewable supply can be allocated against that proportion of the supply that is not otherwise relieved.

Once the agreement is in place it is then the responsibility of the supplier to ensure that he secures sufficient renewable source electricity to meet his contractual obligations. Because the generation of renewable electricity can be unpredictable, the supplier has an extended period (an averaging period) in which to balance the supplies of renewable electricity that he has undertaken to make against the sources of electricity that he has secured. If this is not achieved with the prescribed time limits, the supplier will be liable to account for levy on the difference where:

• electricity supplied that has been exempted from the levy by virtue of paragraph 19 to Schedule 6 of the Act;
• exceeds the amount of renewable source electricity generated or acquired.

Electricity is only “renewable electricity” for the purpose of the exemption if it is the subject of a certificate, a Levy Exemption Certificate (renewable LEC) issued by Ofgem or Ofreg.