A lack of clarity from Ofgem over specifics of the government’s split-ownership commercial and community scheme has not dissuaded developers from pursuing the “difficult” process, said RegenSW chief executive Merlin Hyman.
Developers have until the end of this month to pre-accredit split-ownership projects if they are to qualify for the current feed-in tariff rate, however specific details regarding applications have yet to be covered in guidance issued by Ofgem, something which has triggered strong responses from some in the industry previously.
Among the details lacking is Ofgem’s interpretation of finer points of the application process, such as whether it expects two leases or one lease and a sub-lease, and how grid connections will look like both physically and with respect to DNOs.
Hyman said financing of the community-owned half of the project is also unclear, particularly with regards to bank debt and if banks would retain step-in rights over such projects.
“If a bank did step in, would it no longer be considered a community project and therefore no longer eligible for the Feed-in Tariff? If that’s the case will there be sufficient investment on the community side? Largely they will use local share offers but they will probably need a mix of equity and debt,” Hyman said.
However Hyman said that this more a case of the first window being required to identify problems than a particular problem on Ofgem’s behalf, noting that it would’ve been impossible for Ofgem to “come up with every single permutation in advance of what sites might or might not look like”.
“I can see that their [Ofgem’s] argument will be they just can't define everything and we'll just have to take a common sense approach, but I think they could've set down a bit more criteria.
“I think Ofgem's guidance could've been more helpful, but I wouldn't particularly flag up that they haven't been helpful,” Hyman said.
And while the precise machinations of the scheme have proven to be difficult for some developers, there are still many who consider it to be a viable option and Hyman expects there to be a surprising uptake willing to make it work. “They'll [developers] tell you how hard it is, but you'll be surprised how many manage it,” Hyman added.
