CCL - combined heat and power (CHP)

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • CCL - combined heat and power (CHP)
  • What is a CHP
  • Registering for CCL
  • Exemptions on the main rates of CCL
  • Supplies of qualifying power output (QPO)
  • CHP outputs record
  • Reconciling the CHP electricity outputs
  • Supplies of ‘good quality’ CHP source energy (GQCHP)
  • Balancing and averaging
  • Electricity suppliers using CHP LEC

This guidance note provides a general overview of the main CCL provisions relating to supplies made by CHP stations and should be read in conjunction with the following guidance notes:

Notice CCL1/2: Combined heat and power schemes ; SI 2005/1714 The Climate Change Levy (Combined Heat and Power Stations) Regulations 2005; De Voil Indirect Tax Service V21.128 - all subscription sensitive
  • CCL - glossary
  • Climate Change Levy (CCL) - main rates
  • CCL - accounting and record keeping requirements
  • CCL - reliefs - outside the scope and exempt supplies
  • CCL - reliefs - reduced rates and certificates,
  • CCL - penalties and interest
  • CCL - Carbon Price Floor
What is a CHP

A CHP station produces usable heat and power under a single process. A CHP station is an energy efficient operation that provides very significant fuel savings in comparison with traditional forms of electricity generation and heat supply.

A CHP station will obtain favourable CCL treatment when it is:

  • registered with the Department for Business, Energy & Industrial Strategy (BEIS) CHP Quality Assurance (CHPQA) programme
  • certified annually under that programme. The CCL Exemption Certificate states how the CHP station is treated for CCL purposes and how much of the input fuels used and electricity generated by it will not be liable to the main rates of CCL, or may be liable to a lower amount when compared with conventional electricity generators
  • covered by a valid CCL Exemption Certificate issued by Secretary of State
CHPQA Programme

The CHPQA is a voluntary programme and provides the means to assess and monitor good quality

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