# CCLG7830 - Exempt supplies: Electricity from renewable sources: Averaging period rules

Because some renewable sources are unpredictable in the short term (eg solar (photovoltaics), wind, wave, small-scale hydro), the requirement for suppliers to balance sales to purchases of renewable electricity can be averaged out over an extended period. The provisions for this are outlined in paragraph 20 of Schedule 6 to the Finance Act 2000.

Exemption under paragraph 19: Averaging periods

20.(1) This paragraph applies where a person ("the suppliee') makes supplies of electricity on the basis that they are exempt under paragraph 19 ("exempt renewable supplies").

(2) The rules about balancing and averaging periods are

(a) a balancing period is a period of 3 months;

(b) when a balancing period ends, a new one begins;

(c) the first balancing period and the first averaging period begin at the same time;

(d) unless the supplier specifies an earlier time, that time is the time when he is treated as making the first of the exempt renewable supplies;

(e) when an averaging period ends, a new one begins;

(f) an averaging period ends once it has run for 2 years (but may end sooner under paragraph (g) or sub paragraph (4)(a) or (5)(a));

(g) if the supplier stops making exempt renewable supplies, the end of the balancing period in which he makes the last exempt renewable supply is also the end of the averaging period in which that balancing period falls (3) At the end of each balancing period calculate.

(a) the total of

(i) the quantity of renewable source electricity that the supplier acquired or generated in that period, and

(ii) any balancing credit carried forward to that balancing period; and

(b) the total of

(i) the quantity of electricity supplied by exempt renewable supplies made by him in that period, and

(ii) any balancing debit carried forward to that balancing period.

(4) If the total mentioned in sub paragraph (3)(a) exceeds that mentioned in subparagraph (3)(b)-

(a) the averaging period within which the balancing period fell ends at the end of the balancing period, and

(b) a balancing credit equal to the difference between the two totals is carried forward to the next balancing period.

(5) If the totals mentioned in paragraphs (a) and (b) of subparagraph (3) are the same

(a) the averaging period within which the balancing period fell ends at the end of the balancing period, and

(b) no balancing credit or debit is carried forward to the next balancing period.

(6) If the total mentioned in sub-paragraph (3)(b) exceeds that mentioned in sub-paragraph (3)(a), then—

(a) in a case where, at the time when the balancing period ends, an averaging period also ends because of sub-paragraph (2)(f) or (g), the supplier is for the purposes of this Schedule deemed to make at that time a taxable supply of a quantity of electricity equal to the excess;

(b) in any other case, a balancing debit equal to the excess is carried forward to the next balancing period.