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RISK MANAGEMENT


Closer collaboration between owners and manufacturers will best support design advancements. Ultimately, requiring the best design possible must come from the buyer but owner-operators first need to have a clear understanding of what is possible. There is another factor on the horizon for European manufacturers. Increased competition from Chinese companies will no doubt also speed up design developments. This is likely to be sooner rather than later.


3 OWNERS AND SERVICE PROVIDERS MUST ACT LIKE PARTNERS In terms of optimising operational performance, condition monitoring is vital. It is also integral to devising enhanced designs in the future (raised in point two, above). Here, knowledge really is power. To date, in general it is the contracted service provider – often also the turbine manufacturer – who collects and takes charge of the turbine performance data gathering on site. Owner- operators have tended to concentrate their efforts elsewhere, aside from requesting a certain level of service.


The situation is changing, however, as the sector sees a move towards owner- operators being closely involved in their service provider’s plans and even monitoring performance concurrently. Looking further ahead, we will probably see more owners developing in-house capabilities to operate their own wind farms. In such a scenario, turbine manufacturers could find their role reduce to manufacturing only, rather than also serving as the contracted service provider.


ASSET MANAGEMENT FRAMEWORK Employing an asset management framework that helps establish the most effective inspection and maintenance plans will also enhance performance. Turbine blades, belts, brakes and so forth will need to be inspected by personnel from time to time and there is no getting away from this fact. Fortunately, turbines are less complex than oil platforms. It is relatively straightforward to identify the safety critical components of a turbine, model outcomes and develop maintenance plans around solid intelligence.


Arve Sandve Lloyd's Register Consulting Jayne Harrold


Indirect Taxes Team PwC


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THE CLIMATE CHANGE LEVY DOESN’T AFFECT WIND POWER, RIGHT?


A supplier of electricity to business customers must register for and pay the main rate of Climate Change Levy (CCL) which is currently £0.00554 per kWh for electricity.


Although electricity generated from renewable sources is exempt from the CCL, this might not be the end of the story.


ADMINISTRATIVE CONDITIONS Issues can arise because there are some very prescriptive administrative conditions within the tax legislation that have to be met in order for that exemption to apply.


Failure to meet the conditions upon investigation from HMRC could result in penalties and assessments for tax being raised – potentially for very large figures, given the quantities of power involved. These liabilities can arise even where there are levy exemption certificates which cover the power if the relevant tax requirements are not met.


EXCISE NOTICE CCL1/4


The conditions are set out in ‘Excise Notice CCL1/4: electricity from renewable sources’ and include…


REQUIREMENTS TO… • Make generator and/or supplier notifications to HMRC • Provide contracts that contain renewable source declarations • Supply information on a climate change levy accounting document (or an invoice) in respect of renewable source supplies


PRODUCE LEGIBLE RECORDS RELATING TO… • The renewable generation process • Supplies of renewable electricity and the recipients and any relevant Renewable LEC


• Provide written notices to customers setting out how to identify renewable supplies


These are requirements which apply to both generators and to retailers. HMRC ACTIVITY


Although this may seem purely administrative, we are starting to see much more activity from HMRC reviewing compliance with these requirements. We recommend that you take the time to review your notifications and relevant contracts, including customer contracts and power purchase agreements and ensure that they meet all of the necessary requirements.


www.windenergynetwork.co.uk


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