Are you fit for the new REFIT 2 timelines?
In the latest example of “non-joined up thinking” by the government, if a generator wants to receive REFIT 2 payments for a given PSO period (Oct-Sep), then it needs to have a REFIT 2 Letter of Offer and a PPA agreed 5 months beforehand (end of April). It’s a good thing that the new legislation states they only had to notify the suppliers of this change and not the generators!
The Dept. of Communications Energy and Natural Resources (DCENR) have significantly changed REFIT legislation for 2013 and how it affects generators looking for REFIT 2 Power Purchase Agreements (PPAs).
In the current Statutory Instrument Amendment of the Electricity Regulation Act, there have been two significant changes:
- At least 5 months prior to the commencement of a levy period each relevant supplier shall provide the CER with an estimate of the additional costs……that such supplier estimates it will incur in the next levy period in complying with its obligations under this Order in respect of each REFIT power purchase agreement to which it is a party.
- A relevant supplier may only receive payment from the PSO Levy fund in respect of each REFIT PPA to which it is a party in any given levy period when the specific REFIT PPA……has been included in both the PSO levy decision taken by the CER for the specific levy period.
So for example, the upcoming PSO period is October 2013 to September 2014. If a generator plans on being operational within that timeframe and it wants to receive REFIT 2 payments, then it would have needed a REFIT 2 Letter of Offer and PPA contract in place before the end of April 2013.
It is also reported that in the case of projects that require banks to cover the senior debt, some banks are now asking for proof from the PPA providers that a given project has been included in the PSO period submissions.
This is going to put even further pressure on generators that require REFIT 2 payments to get their projects off the ground. It gives less flexibility for PPA negotiations, it restricts the timelines of projects and it gives the financial lenders yet another Condition Precedent when closing out financial agreements.
CER – Commission of Energy Regulation
DCENR – Department of Communications, Energy and Natural Resources
PPA – Power Purchase Agreement
PSO – Public Service Obligation
REFIT – Renewable Energy Feed-In-Tariff