Capacity Mechanism (CM)
Capacity mechanisms enable power plants to be available for generating electricity when needed. In exchange, the mechanisms provide payments to these power plants. These capacity payments are in addition to the earnings power plants gain by selling electricity on the power market. To find out more, see the EC website.
Climate Change Levy (CCL)
What is climate change levy and how is it charged?
Climate Change Levy, sometimes shortened to CCL, is a UK-specific energy tax.
How ccl is calculated
CCL will only apply to your business if your energy consumption averages more than 33 kWh of electricity or 144 kWh of gas per day. Where your energy consumption falls below this amount the consumption is considered to be “de minimus” and will therefore not attract any CCL charge.
If your premises is considered to be of “domestic use” then the associated usage is also excluded from CCL as well as standard VAT – see below.
When a business has a single site with multiple MPANs, the total consumption is calculated by combining the consumption for all MPANs on the site. This total is compared against the de minimus number to determine whether a CCL tax should be applied.
How to reduce your ccl
A reduction in your businesses CCL can be applied if you have the relevant CCL certificate issued by HMRC.
Contracts for Difference (CfD)
The Contracts for Difference (CfD) scheme is the U.K. government’s main mechanism for supporting low-carbon electricity generation.
CfDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high.
The CfD scheme requires all suppliers to pay a levy to fund this ongoing development. This cost is then passed onto all electricity customers through their invoices.