Salix Finance and Government Incentives - Feed-In Tariff & Renewable Heat Incentive
Salix are pleased to have worked with our clients since 2004 to improve the energy efficiency of public sector buildings, drive down energy bills and reduce greenhouse gas emissions. Many of our clients continue to find innovative ways of driving-down energy consumption of their sites. Some are moving to consider renewables as the next step to further reducing their reliance on fossil fuels.
To help our clients maximise the benefits of renewables, Salix has worked with OFGEM to produce some general guidance for our clients looking to access the Feed-In Tariff (FIT) and Renewable Heat Incentive (RHI) schemes while benefitting from a Salix interest-free loan.
Salix is keen to support clients who are looking to take the opportunity of completing and registering a solar PV installation before the FIT scheme is due to close on the 31 March 2019. For more information on the consultation and closure of the FIT scheme, please visit the Government consultation website.
What is OFGEM’s position?
OFGEM have advised Salix that the interest-free loan should not stop a client from applying for the FIT/RHI schemes however, each application for the scheme is assessed on a case-by-case basis by either OFGEM or the FIT/RHI Licensee.
For further information on the FIT scheme, how to apply and other general information, please visit OFGEM’s FAQ page by following this link. For further information on the RHI scheme, how to apply and other general information, please visit OFGEM’s FAQ page by following this link.
How can you apply for a Salix loan including the FIT/RHI?
When you apply for a Salix loan, the FIT benefit can be incorporated into the energy price (p/kWh) when completing our Compliance Tool. By doing this, the combined financial benefit to our clients (energy cost reduction and FIT benefit) will reduce the overall payback of the project.
Incorporating the FIT benefit into your Salix loan application:
A client is in the process of installing a 40 kWp solar installation and is looking to register the installation for the FIT scheme. The organisation currently pays 10 pence per unit of electricity used (kWh). The project is due to complete in August 2018 and from OFGEM’s FIT tariff tables, discovers they could be eligible for a FIT tariff of 4.17 p/kWh of generation.
For the purposes of applying for Salix financing, the full financial fuel saving benefit of the energy displaced (10p/kWh) and the FIT generation benefit (4.17p/kWh) can be entered into the Compliance Tool as a blended fuel price of 14.17p/kWh.
Incorporating the RHI benefit into your Salix loan application:
A client is in the process of installing an Air-Source Heat Pump and is looking to register the installation for the RHI scheme. The organisation currently pays 10 pence per unit of electricity used (kWh). The project is due to complete in August 2018 and from OFGEM’s RHI tariff tables, discovers they could be eligible for an RHI tariff of 2.69 p/kWh of generation.
For the purposes of applying for Salix financing, the full financial fuel saving benefit of the energy displaced (10p/kWh) and the RHI generation benefit (2.69p/kWh) can be entered into the Compliance Tool as a blended fuel price of 12.69p/kWh.
What is Salix Finance’s position on Solar PV?
Salix is proud to support our clients in reducing their energy consumption, enabling them to benefit from lower energy bills and a reduced carbon-footprint. When you apply for a Salix loan to support a solar PV installation, Salix would like to understand how your organisation is working towards becoming as energy efficient as possible and how renewables will complement your energy conservation measures (ECM) to help you achieve this goal.
Salix works closely with all our clients to see how they can maximise the efficiency of their site to get the best results in terms of reducing their energy consumption. For information on past projects, best practice and support material, please visit our knowledge sharing website or you can contact one of the team directly for more information at [email protected].
In the case where clients wish to oversize their PV installations to benefit from additional exporting revenue; Salix could provide finance for the proportion of the installation that tackles the site energy consumption and the client then provide finance to support the revenue-making proportion of the installation.
A client plans to intentionally oversize a proposed solar PV installation to create a revenue stream for the organisation. Its estimated that up to 30% of the total energy generated over the course of the year will be exported to the National Grid and the organisation will receive a revenue benefit.
In this example, Salix would offer the client a maximum of 70% financing of the total project cost and the project will be assessed on the merits of the energy saving alone. Any additional export revenue benefit will be considered a private benefit to the organisation who will need to source 30% of the costs of the project.
Salix also advises clients to review their state aid guidance to make sure that by taking on a Salix loan and the FIT, the organisation will still be operating with EU state aid rules.
For further guidance on how you can do this when applying for a Salix loan or for other technical queries, please contact one of the Technical Services team ([email protected]) who will be happy to assist.
Updated: August 2018