Notice

Offshore Coordination Support Scheme: clarification questions with responses (updated 28 February 2023)

Updated 5 December 2023

In the Offshore Coordination Support Scheme (OCSS) guidance documents, Department for Energy Security and Net Zero (DESNZ) committed to publishing any answers to questions raised during the process. This document will outline all non-commercially sensitive questions received by DESNZ either received by offshore.coordination@beis.gov.uk or other DESNZ official account or in any other meeting between DESNZ officials and potential applicants.

This document will continue to be updated as and when DESNZ receives questions from potential applicants. If an applicant requires a one-to-one meeting to discuss any questions not answered in this document or the published OCSS guidance, it can be arranged by contacting the email address above.

Eligibility Criteria

1. Are Northern Ireland based applications eligible to apply for the scheme or is it for Great Britain only? (added 12 January 2023)

The following requirements are set out on page 23 of the Offshore Coordination Support Scheme guidance (see list of documents) – all of which must be complied with by applications:

Applications must meet Eligibility Criteria No 10

Applications must only apply for funding for Development Expenditure that will relate to activities/assets that will (when implemented) take place within:

• Great Britain;
• in the territorial sea adjacent to Great Britain; and/or
• in any Renewable Energy Zone

Applications must meet Eligibility Criteria No 9:

The transmission/interconnector assets described in the application that include the Qualifying Coordinated Project must connect (at one end) to the onshore transmission network in Great Britain (GB). (NB: In the event of an interconnector between GB and any other country Development Expenditure will only be permitted in respect of that part of the asset attributable to and of benefit to the GB onshore or offshore transmission network)

Applications must meet Eligibility Criteria No 3:

• all applicants must be a business registered in the UK
• applicants are also required to comply with relevant subsidy control rules

In practice, this means that a coordinated asset that does not connect at all to GB could not be included. An interconnector asset between Northern Ireland (NI) and GB could potentially be included as one Project. However, funding would only be available in respect of the Development Expenditure related to the GB onshore/offshore transmission network. Applicants can be based in NI but if they are then questions in respect of EU State aid may arise and DESNZ would need to consider these on a case-by-case basis.

2. Can you confirm that the application for funding only includes the Holistic Network Design (HND) 1.0 projects, connection points whether co-ordinated or radial will not be confirmed until March 2023 for Holistic Network Design Follow Up Exercise (HND FUE) however the funding application is to be submitted by 28 February.

Page 23 point 5 of the guidance note – please confirm our understanding that to be eligible to apply any project in Scotland (all proposed co-ordinated projects are in the HND) must be included within a consortia that includes an interconnector or Transmission Owner (TO). (added 12 January 2023)

As regards the Offshore Coordination Support Scheme, the application for funding should include at least 2 offshore wind projects that should apply as a consortia. One of the projects can be in HND 1.0, but as per eligibility criterion 5, this consortia must include at least one project that is NOT in the HND – it does not matter if this projects is an interconnector or an offshore wind farm.

Criterion 6 states that one of the Projects that are part of a consortia must have completed the Connection and Infrastructure Options Note Process (CION) process. On the information you have provided it is not clear whether this would be the case.

3. We previously understood the OCSS is targeting Early Opportunities projects only, however the eligibility criteria set out on page 23 of the Guidance suggests a Project from Pathway to 2030 workstream could apply providing a second Project that forms of the application is not in the HND and meets the eligibility criteria? (added 12 January 2023)

Correct. To be clear, we consider Early Opportunities to mean a project that:

(a) has not fully achieved planning permission; and
(b) has been through the CION process.

You are correct that not all projects within a Qualifying Coordinated Project need to satisfy this criteria. While no projects in respect of the Qualifying Coordinated Project can have achieved planning consent only one of the relevant Projects must have been through the CION process. Please see further Eligibility Criteria 6.

4. Could projects which comprise of a coordinated development and delivery of the following be considered eligible under the scheme?

An offshore wind farm; A radial offshore transmission system; A co-located onshore storage or electrolysis asset, which connects to the offshore transmission system onshore? (added 25 January 2023)

In the stated scenario it is referred to a “radial offshore windfarm”. Currently it is hard to see how this could be part of a “Qualifying Coordinated Project” as while an offshore windfarm is a “Project”, there is inherently no “offshore coordination”. Similarly, an onshore battery storage or electrolysis asset does not meet the definition of a “Project” as it is not (of itself) an offshore asset.

Please note for reference the scheme defined terms as set out in pages 44-45 of the Scheme Guidance (Appendix 1).

5. Can you confirm the non-applicability of the licence requirement to MPIs? (added 25 January 2023)

Due to the OTNR interim and enduring workstreams on MPIs there are no licencing arrangements yet in place for MPI projects, whether through Ofgem’s interim proposals amending the interconnector licence or the enduring regime new MPI asset class (we also note that Ofgem’s C&F MPI Pilot did not require a licence for application)

Given that Ofgem are working on amending existing licences for pilot MPIs, and that this work will not be completed prior to the OCSS key milestones, so we do not require MPIs as determined by the definition of “subsea electricity cables (and ancillary assets) that connect GB to neighbouring markets and also connect an offshore generation to the GB shore” to require a license in order to receive OCSS funding.

We understand a multi-purpose interconnector to mean “subsea electricity cables (and ancillary assets) that connect GB to neighbouring markets and also connect an offshore generation to the GB shore”. As such a multi-purpose interconnector is not of itself a Project but a Qualifying Coordinated Project. This is because it coordinates the offshore transmission of what would be 2 Projects (if both had radial/single use transmission). Namely an offshore generator and an interconnector – both of which are Projects. The fact that in the future there may be a single multi-purpose interconnector licence does not prejudice this analysis.

6. Can you confirm the non-applicability of the seabed lease requirement to MPIs? (added 25 January 2023)

Interconnectors do not participate with offshore wind in Crown Estate seabed leasing, seabed requirements instead form part of the consenting processes during late stage development (either a Marine Licence for Town & Country Planning, or incorporated into Development Consent Order)

Broadly as long as the wind farm[s] that form[s] the generation part of the MPI has a seabed lease at the time of applying for OCSS funding, we do not require the interconnection part of the MPI, and thus the entire MPI, to have an existent seabed lease as a condition of getting OCSS funding. 

7. Can you clarify how to define the Qualifying Coordinated Project?

For example, for an MPI connecting GB offshore wind, there is considerable overlap with the MPI project (and general unbundling challenges as per the above on financial information) (added 25 January 2023)

The definition of Qualifying Coordinated Project will vary from application to application. The scope of a Qualifying Coordinated Project should be understood by the radial/single use counterfactual. Basically, this means it should only include those assets linked to or related to offshore coordinated transmission with another Project.

The term Qualifying Coordinated Project should not include any aspect of an asset not within the area set out in Eligibility Criteria 10. Nor should it include any assets that would be needed and would be the same if the relevant Project whose offshore transmission was being coordinated was designed on a single use/radial basis. Note this does not preclude onshore assets being part of the Qualifying Coordinated Project in all circumstances – for example where an onshore substation required a different approach because of offshore coordination of multiple Projects this may be acceptable. We would expect Applicants to set out the detail and rationale for this on a case-by-case basis.

By way of 2 examples:

Imagine a coordinated offshore transmission project between 2 offshore windfarms (meaning the offshore windfarms would be the Projects). In this case we would expect the Qualifying Coordinated Project to include only those assets related to offshore transmission coordination. We would only expect inclusion of those assets that would be different than if the 2 offshore windfarms had sought radial solutions. By way of indication, we might primarily expect this to include those assets that are within the “Offshore Transmission System” (as such term is defined in the Grid Code).

A more difficult scenario arises in the case of a multi-purpose interconnector which involves the connection of an offshore wind farm generator in the GB market to transmission infrastructure that is classified as an interconnector (in this case these are both Projects). However, once again the same logic applies, namely the Qualifying Coordinated Project should be only those assets related to offshore transmission coordination. Those parts of the interconnector or offshore wind farm generator that would be constructed in the event of a single use or separate radial connection would not comprise the Qualifying Coordinated Project. By way of indication, we might primarily expect this to include those assets that are within the “Offshore Transmission System” (as such term is defined in the Grid Code).

8. Can you confirm that onshore coordination activities are eligible?

For example, coordination activities or works undertaken onshore in order to enable more coordinated development of offshore wind, transmission or interconnector assets offshore (added 25 January 2023)

Onshore coordination activities are not of themselves eligible for funding but onshore activities that enable offshore coordination may be. By way of example, enhancements to the onshore substation to enable offshore coordination may be permissible. What is not permissible is onshore coordination itself. So for example 2 separate offshore windfarm projects with separate radial links and a single coordinated onshore substation would not be eligible. This is because the coordination in this case is not offshore.

9. Section B Exclusions – Guidance states that the exclusions relate to the organisation or any other person how has powers or representation, decision or control in the organisation. This is to be completed by each applicant in the consortia, but can you confirm if it is for that company individually or applies to parent companies as well? (added 9 February 2023)

It applies to each applicant and any parent company who has significant control in that applicant for example a parent that has 50% or more ownership would likely be caught. We cannot give a one size fits all answer to what would constitute power over decision making or control but we can consider on a case by case basis if you would like us to review the org chart. 

The question should be answered by the applicant company and their ultimate parent company (if they have one) and specifically any persons within that company who has powers of representation, decision or control in the organisation. Major or majority shareholders should also answer.

10. Page 8 of the main Guidance document lists the requirements for a complete application and most items are carried over into the application forms. However, neither the Application Guidance nor the Application Forms themselves refer back to the requirement for a business case/plan for the coordinated solution or CVs for key personnel critical to delivery of the project. Please advise – are these requirements still applicable, and if so where can they be submitted? (added 9 February 2023)

Yes, these documents are still needed, and submission by email is appropriate.

11. We have a project proposal with 2 offshore windfarms one in HND1 and the other one not in HND1 but currently under review in HND2, and an onshore DC grid asset which will reduce the need of two additional offshore assets. (added 9 February 2023)

Our challenge is we cannot a find an Offshore Wind Farm which has been through the CION process in last years that we can collaborate with.

This is a real challenge as more co-ordination is required between these Wind Farms and we not be eligible for the funding because of the CION requirement.

Can you please confirm in this case is it worth us making the application or we will be deemed ineligible?

Of the consortia of projects putting forward an Application, one of the projects can indeed be in the HND, but as you note (per eligibility criterion 5), this consortia must include at least one project that is NOT in the HND – it does not matter if this projects is an interconnector or an offshore wind farm.

We understand that you are keen to build on the design that the HND presents with nearby projects to reduce the need for additional assets, and we would very much still encourage you to explore these. However, the OCSS funding is targeted towards projects which have been through the CION process and therefore it does not sound like your Application would be eligible.

Funding award

12. Can you confirm what happens if grant funding is awarded for a Qualifying Coordinated Project, but ultimately the radial/sole use connection is selected by the Project (meaning the wind farm)? (added 12 January 2023)

As long as the grant funding which was given under the Offshore Coordination Support Scheme was used by the Applicant for the purpose detailed in the Application, and the activity which was funded was undertaken to the standards detailed in the Final Grant Offer Letter, there is no obligation for the Project to take forward the coordinated approach in favour of the radial. Where an issue may arise is if an Applicant has not used the funding as set out in the Application. Further, if a decision was taken not to proceed with a coordinated solution, DESNZ would expect to know this as soon as possible and (where mid development) DESNZ would not pay grant amounts in respect of costs not necessarily incurred after this date. The position in this regard will be clarified in the final Final Grant Offer Letter (FGOL).

13. How will the rankings of Applications be done after they have been scored? (added 9 February 2023)

Detailed information on the ranking process can be found in the Offshore Coordination Support Scheme Guidance, on page 18 in the bullet entitled ‘Application of the Finite Funding Envelope’.

14. When will other initiatives of the size and scale of the OCSS could be made available to the remaining UK Offshore wind developers to ensure that the greatest number of projects are coordinated and maximise the benefits to communities, the environment, and consumers? (added 9 February 2023)

The objective of the Offshore Coordination Support Scheme (OCSS) is predominantly to enable the development of coordinated options for offshore transmission for late-stage projects that are not in the HND. These projects’ timelines have meant that for them, considering coordination comes at a later stage in their project development than other projects and therefore there is a greater need for a financial intervention through the OCSS.

There is currently no intention to provide an equivalent initiative for less well advanced projects that are covered by the HND and the HNDFUE, but we will keep you updated should this change. We anticipate that HND/HNDFUE developers will work together, alongside the TOs, to ensure that projects are coordinated and that the benefits of coordination for communities, environment and consumers can be realised.

15. Can you please confirm what the maximum potential value of funding is available for one successful application? (added 21 February 2023)

The total pot of funding available is £100 million, this is split between of two financial years, with up to £50 million available in FY2023/2024 and up to £50 million in FY2024/2025. A single Application could therefore bid for up to £100 million. If successful the Application could potentially be offered up to the total ‘pot’ of funding available.

However, please note, as detailed in the Section 1 of the Scheme Guidance, DESNZ expects to provide Grants totalling up to £50 million in each of Financial Years 2023/24 and 2024/25 (a total Scheme budget of up to £100 million). It should be noted that these amounts are not to be treated as an expected Grant amount for a single Application, as DESNZ expects to be able to fund multiple Applications with the total Grant amount. Further, DESNZ reserves the right to amend these amounts at any time at its discretion.

Finance

16. What level of accounts are required?

For example, our Project[s] is/are not yet incorporated so we expect to apply under the legal entity for the project, and provide accounts for the ultimate parent company (added 25 January 2023)

The approach we have taken is that Applicants should be the entity that will undertake the Project. DESNZ can only issue grant offer letters to the legal entity that has applied for the grant (and has been subject to due diligence) and payment can only be made to the entity named on the grant offer letter. In exceptional circumstances where the company that would deliver the Project has not yet been established and there is a good reason for this, we may accept that the Applicant could be the corporate entity that would be the parent company for the new entity that would eventually end up delivering the Project (and owning the Project assets). So if the new entity not yet created is an 100% subsidiary. If this application proceeds to a grant offer then, at a later stage, we may be able to, at our discretion, add the new entity to the grant offer letter on a joint basis with the applicant company which would then allow payment to be made to the new entity. If you wish us to consider the reason why the entity is not yet incorporated please provide further details and we can do so.  

17. Does an applicant need to submit 5-year forecasts with the application? (added 21 February 2023)

Yes it is requested in the application form.

What alternative data source can be provided to show internal 5 year ahead forecasts for parent company?  For example, an Annual Report or a credit rating agency assessment, are these acceptable alternative data sources?

Annual reports are by their nature historic so highly unlikely they would contain forecasts required. We require forecasts for the next 5 years for the parental entity which cover the main metrics across the balance sheet and income statement (turnover, gross or operating profit, net assets/liabilities, net current assets/liabilities) as a minimum. Due to the commercially sensitive nature of these forecasts, it is highly unlikely that any external data sources would be sufficient.  However, if the applicant can explicitly confirm that any forecast provided via external documentation is an accurate reflection of the internal forecasts this should suffice.  We would be happy for the parental entity to send the information directly to DESNZ if this allayed concerns of sharing forecasts.  It should also be stated that if an applicant cannot or does not wish to provide evidence it does not necessarily preclude them from a grant award, but we cannot state conclusively that it will not have an adverse impact on any financial assessment made.

18. Could you please clarify if forecasts provided would be subject to full FOI?(added 21 February 2023)

The decision to release any information requested in the first instance will be at BEIS’s absolute discretion. BEIS would consider whether the information requested can be released or should be withheld under any of the relevant exemptions under the FOI Act 2000.  For example Section 43(2) of the Act states that information is exempt if its disclosure under FOI Act would, or would be likely to, prejudice the commercial interests of any legal person, in this context a commercial interest relates to a legal person’s ability to participate competitively in a commercial activity.

An exemption can only be upheld if the public interest in retaining information outweighs the public interest in disclosure. Should BEIS consider the information requested as being exempt (or if the requester is not satisfied with any response provided), the requestor can request an internal review of the response given and could escalate their request to the Information Commissioner’s Office (ICO).

19. The application process for the OCSS asks us to declare whether within the past five years you, your organisation or any other person who has powers of representation, decision or control in the organisation have been convicted anywhere in the world of any of the offences within the summary below.

But does this mean the immediate shareholders of the project or the ultimate parent ? (added 9 February 2023)

The question should be answered by the applicant company and their ultimate parent company (if they have one) and specifically any persons within that company who has powers of representation, decision or control in the organisation.

Major or majority shareholders should also answer.

20. The development work involved with the OCSS will utilise in house resource as well as external bought in expertise.

Can you confirm that the Grant will cover both internal and external costs.

If the Grant does not cover internal costs can the internal costs be factored into the 5% the scheme will not cover? I believe the scheme is to cover 95% of the total amount to be incurred by the applicants. (added 9 February 2023)

Eligibility Criteria Number 4 on Page 23 of the Scheme Guidance is clear that ‘Applications must be made for no more than 95% of the Eligible Costs of the relevant Qualifying Coordinated Project.’ This means in order to carry out the Project, you will need to fund the additional 5%. Eligible costs are defined on page 44 and the Scheme Guidance outlines the process for this. Please also see our previous response to FTE here.

21. Could you please advise in relation to UK Subsidy Control guidance (Section 14 of the Guidance document) how DESNZ have justified the potential for 95% grant intervention rates? (added 9 February 2023)

We considered extensively the appropriate grant intervention rate prior to the launch of the OCSS (Scheme). It did this as part of a wider exercise in considering what amounts were proportionate to the market failures identified in respect of the Scheme. For other workstreams in the OTNR (and the energy infrastructure projects that are captured within the scope of each of these) we have corrected this market failure through the Holistic Network Design and other work.  In reaching its determination we took into account:

1. The urgent need for coordinated offshore transmission solutions in the short term. This is required to ensure sufficient capacity to achieve relevant offshore wind targets.
2. The limited nature and scope of existing coordinated projects in the market.
3. An acknowledgment of the uncertain regulatory environment and delivery timelines for in-scope projects
4. The inherent challenges in asking developers who are typically in competition to coordinate and cooperate. This is particularly the case in terms of connection processes which may be proprietary.
5. The longstanding use of radial/single use offshore transmission assets and the risk that (unless appropriately funded) developers may simply seek to justify radial solutions going forwards.
6. We have expressly and deliberately constrained grant sums to the amount of Additional Development Expenditure (thus ensuring that we are not funding the development costs for any offshore transmission work that would have to be done in any event).
7. We will expressly require Grant Recipients to share key lessons learned with the wider industry and Grant Recipients will not be permitted to benefit solely or exclusively from their findings.
8. Permissible aid intensity amounts under past grant funding arrangements including in respect of research and development projects and environmental projects.
9. The need for applicants to commit some amount of relevant costs themselves to ensure their own commitment to the matter.
10. The fact that the regulatory regime will likely (subject of course to relevant Ofgem rules at the time) allow future developers of Projects to recover efficient costs of coordinated offshore transmission solutions (either by way of an efficient FTV for offshore windfarms, the RAB to inform any cap and floor mechanism for interconnectors or via allowed revenues for transmission owners). This limits the distortion of any grant funding. This will be subject to the policies Ofgem are still working on for Anticipatory Investment, please see Offshore Coordination - Early Opportunities: Consultation on our Minded-to Decision on Anticipatory Investment and Implementation of Policy Changes (Ofgem)

As you note, we have reserved the right to award grants with up to 95% aid intensity. However, in line with point iii in section three of the OCSS Scheme Guidance (page 18), we may award grants which have a lower aid intensity.

22. What is the amount of liability for the parent company in signing a parental undertaking guarantee? (added 21 February 2023)

We recently uploaded the Parental Undertaking Guarantee (the guarantee any applicants parent company will need to sign) to gov.uk, which does state a limit of liability (whilst the terms and conditions document just doesn’t mention it). The Parental Undertaking Guarantee (PUG) states Any amounts due from [Guaranteeing Parent Company Name] shall carry interest at 1.5% above the base rate for the time being of the Bank of England from the date of demand to the date of payment.    Therefore, liabilities are therefore limited to 100% of the grant + 1.5% interest above the base rate at the time from the Bank of England from the date of demand to the date of payment.

23. What is the amount of liability for the parent company in signing a parental undertaking guarantee? (added 21 February 2023)

Can you confirm whether Consumer Price Index (CPI) or Retail Price Index (RPI) will be used for the Parental Undertaking Guarantees?

Interest will be calculated from the date of the Grant payment until the date it is repaid by the Grant Recipient, in accordance with the retail prices index (that index being taken as 0% for any period during which the index is negative).

24. Can you confirm how inflation will be managed for grant payments? (added 21 February 2023)

The grant payment schedule will be set out in schedule 4 of the FGOL when it is signed and will not be subject change due to inflationary instabilities.

25. We’ve been asked to provide a parent company guarantee and a forward view of company accounts. We may not be able to provide them with our application, but will provide then before down selection. Is this acceptable? (added 28 February 2023)

We can confirm that as long as the applicant confirms they can provide a parental guarantee in the application form that’s fine, as providing the guarantee will be a condition of the grant offer letter. Please advise in the application when you are able to provide the future forecasts if you haven’t access to them now - noting the sooner the better, to decrease the risk that it holds up or delays the Due Diligence checks.

Consortia

26. Can a single application involve a consortia with separate onshore coordination and offshore coordination? (added 25 January 2023)

We would need to consider a specific example and would be happy to answer this request if of assistance. By general rule however, onshore coordination activities are not of themselves eligible for funding but onshore activities that enable offshore coordination may be. By way of example, enhancements to the onshore substation to enable offshore coordination may be permissible. What is not permissible is onshore coordination itself. So for example 2 separate offshore windfarm projects with separate radial links and a single coordinated onshore substation would not be eligible. This is because the coordination in this case is not offshore.

27. Do all companies need to be in the same consortia agreement – for example, could an MPI have one agreement with one company for onshore coordination and a separate agreement with another company for offshore coordination? (added 25 January 2023)

The scope of this question is unclear. Applicants must form a consortia in respect of any one application. Applicants may make multiple Applications – see further our Guidance in this respect

28. Can 2 MPIs apply together as a consortia? (added 25 January 2023)

They could but this would be at least a 3 Project application. We understand a multi-purpose interconnector to mean cables that connect GB to neighbouring markets and connect offshore generation to the GB shore. In the case of 2 MPIs, there would at the very least need to be one offshore generation asset (one Project) and 2 sets of what would be (absent the multi-purpose interconnection) interconnector cables (2 Projects). We would typically expect applications to simply comprise a single multi-purpose interconnector asset with the 2 Projects being the offshore generation asset and the interconnection.

To be clear those aspects of a multi-purpose interconnector that would not have been developed if the relevant offshore generation asset and offshore interconnection assets has simply had their own radial/separate connection to the GB onshore network are a Qualifying Coordinated Project.  

29. Is it a prerequisite to have a signed consortium agreement when submitting an application for funding or can this be complete after submission? (added 1 February 2023)

As stated in the Guidance, for an Application to be considered ‘complete’ when it is submitted (by the Closing Time), a signed consortia agreement must be submitted along with the 3 Application Forms. At the time of submission we only require this agreement to allow for a lead applicant to represent and speak for all parties in respect of an application. Before an actual Final Grant Offer Letter is offered we would expect to see further evidence of a consortia agreement that ensured the lead applicant was to distribute funds to all relevant consortia members as proposed and ensure that all consortia members ensured compliance with the terms of the Final Grant Offer Letter.

30. Can an offshore wind developer of multiple projects be the lead applicant? (added 9 February 2023)

The Scheme Guidance is clear that all members of the consortia should be members who own the Projects. As stated on page 6 of the Scheme Guidance:

‘Projects refer to the relevant assets that either would be, or would be facilitated, by the Qualifying Coordinated Projects. So by way of example, a single offshore windfarm is a Project as is an interconnector and an offshore bootstrap. The consortia should comprise the companies that would own the relevant assets of the Project(1) in each case – so assuming a consortium between an offshore windfarm and an interconnector – the eventual owner of the windfarm and the eventual owner of the interconnector would need to be listed as the consortium members’. Footnote (1) on page 6 specifies ‘We understand that post commissioning offshore windfarms are required to sell their offshore transmission assets to an offshore transmission owner (OFTO). To be clear, an OFTO and the windfarm it serves does not represent two projects. Also in the development phase of an OFTO (not an OFTO Build), the Applicant should be the developer of the windfarm. See further Appendix 1.’

Given this, the Lead Applicant needs to own a Project that will form a component part of the consortia.

Administrative

31. Can you confirm that any expenditure from the start of the next financial year in April 2023 is eligible for OCSS funding? (added 25 January 2023)

Please see the Guidance which is clear on this point. It states that, until a FGOL is entered into, we will not be responsible for nor will we make any commitment in respect of costs that Applicants may incur. Notwithstanding the above, DESNZ may agree to Applicants incurring expenditure at risk following the issuance of a Letter in Principle. The Letter in Principle does not guarantee Grant funding or an FGOL but can potentially be used as the start date for eligible expenditure that can be defrayed for the purposes of the FGOL.

32. There is a discrepancy between Sections G, H and I in the Application Form 1 and the Guidance (added 25 January 2023)

This had been brought to our attention, there was a slight misalignment between the 2 documents, we have corrected this. Further we have amended Section G of Application Form 1 so that the text now reads:

Section G: Accompanying Documentation Checklist

In this section you will be asked to list all of the Annexes that you are intending to submit to support your application. More details on the requirements for a complete Application can be found in Section 2 of the Scheme Guidance.

33. On the information that we provide as part of the application Will that application information ever be made public? If it is to be made public when will it be? Would the information we submit into the application be subject to Freedom of Information (added 9 February 2023)

As regards information that will be made public relating to the Qualifying Coordinated Project, Page 39 of the Scheme guidance details that, ‘it will be a condition of the FGOL that successful Applicants produce a report detailing key lessons learned that may be shared across Government and with the industry; and DESNZ has intellectual property rights over the outputs of certain activities funded by Grants and that DESNZ may share these with the industry. DESNZ will not require successful Applicants to share or make publicly available any material that is (in its view) proprietary and confidential in nature. This will include information which either: (i) existed prior to the award of Grant; and/or (ii) is based on or incorporates proprietary and confidential information.’

The information you submit into the application will be subject to Freedom of Information (FOI) requests. However, regarding FOIs, whilst DESNZ is the holder of the information, and has the ultimate say on disclosure, we normally advise that, before disclosing third party information, we consult with yourselves (as the third party) on any sensitivities you may have in the information being disclosed. The procedure outlining the processing and management of your personal data is contained in the Privacy Notice on Pages 19-20 of Application Form 1. The Terms and Conditions of the FGOL provide guidance on the sharing of information, particularly Sections 10-13.’

Application Form 1

All of the below relate to numbered questions in Application form 1

34. C.26-33 – counterfactual project information: confirming scope of required information, for only the period of funding or full asset lifetime etc. Our reading of Guidance is that counterfactual should include baseline investment and project dates, and this would include through to operations – is that correct, or a more limited scope required? (added 9 February 2023)

The information should be provided for the full asset lifetime.

35. Can you provide further clarity about the financial information required in Application Form 1 Section E?

What level of detail will be required for applicant 5-year forecast for E1.3 and parent company 5-year forecast for E1.5

Please clarify the parameters for Qualifying Coordinated Project financial information – for example, generation and transmission unbundling requirements (added 25 January 2023)

The critical point is that the financial information for the Applicant should relate to the entity that will undertake the implementation of the Qualifying Coordinated Project (at least up to construction completion/commissioning – at which point we recognise there may be separation of assets). In respect of any MPI we assume there will be a company that designs, builds, owns and operates the MPI asset. We are happy to answer any more specific unbundling queries if there is a specific query/issue.

Please provide your company’s (the Applicant) most recent signed and audited (if applicable) accounts for the previous two years.  If the date since your most recent published accounts exceeds 6 months, please provide management or draft accounts that cover the period from the latest set of published accounts to present (as a minimum this should include the income statement and balance sheet).

Please provide your company’s financial forecasts for the next 5 years.  This should include the income statement and balance sheet.  Also, please confirm whether the forecasts include the financial impact of the project you are applying for. 

Clarify parameters for Qualifying Coordinated Project financial information – e.g. generation and transmission unbundling requirements.  I ‘m not sure I understand the question fully, but essentially, we require the full detailed costings for the Qualifying Coordinated solution to demonstrate additionality – this includes both Capital and Revenue expenditure (Q. E1.8).

36. C1.14 – requirement for a reasonable Parent Company Guarantee (PCG): as lead applicant we should in principle be able to provide a reasonable PCG, but would like to better understand the requirements. (added 9 February 2023)

Are PUGs necessary in all instances?

Yes, we will require one in all circumstances.

Is it possible for separate guarantees to be provided for all Applicants?

We will only contract with the Lead Applicant therefore only need a PCG for that Applicant. However the lead applicant will be responsible for the conduct of all other applicants so to that extent the PUG will cover all parties. Of course this risk can be mitigated between applicants in the consortium agreement between themselves.

Can DESNZ at this time provide any further detail on the terms expected for PCGs? – there will be significant governance requirements internally.

We have published a copy of the Parental Undertaking Guarantee (PUG) template on the OCSS GOV.UK page. We also propose to publish on GOV.UK with the OCSS FGOL draft shortly.

37. H1.2 – declaration of application’s compliance with the UK’s subsidy control requirements: we understand the necessity of this declaration but would like to propose a slight amendment to better reflect responsibility across an application’s consortia. (added 9 February 2023)

The lead applicant will be responsible for all funds and for all applicants in the consortia. The lead applicant can back this liability off in any consortia agreement but re HMG the commitment for all members of the consortia must come from the lead applicant.

38. E1.5 – requirement for 5-year forecasts from the lead applicant’s parent company: we would like to propose using alternative data sources rather than internal forecasts so as to fully maintain confidentiality and commercial sensitivity.

There are alternative sources with forecast data already in the public domain, for instance Companies House filings (including forecasts on growth, investment, gearing, etc.) Would such sources be an acceptable alternative for DESNZ to assess? (added 9 February 2023)

The team in DESNZ which will assess these forecasts have confirmed they will require internal forecasts for their analysis – alternative data sources (impossible to assess as no detail given as to the origin etc) are not suitable.  All applicants are asked for the same documents and commercial sensitivity is not considered a mitigating factor – it’s worth noting that they deal with some of the largest multi-national companies world-wide and all evidence is handled in strictest confidence and only used for the purpose of this assessment.   If the parent will not allow subsidiaries to see the forecasts, the parent could send the information direct to DESNZ.

C1.27 of Application Form 1 – can you please clarify what is meant by assumed grant, does this refer to other funding beyond OCSS or to netting off OCSS funds from Project costs? What is meant by investment – i.e. does this include OPEX costs or just Devex & Capex?

Investment = devex +capex costs, and assumed grant = your OCSS bid amount (on the assumption you would be successful).

Are the option fees to be included?

Yes (as they are Capex)

39. Questions on C1.29-32 of Application Form 1 (Added 21 February 2023)

C1.29 – can you please confirm if Project start date should be defined from the point at which Devex costs are incurred, or should be defined otherwise?

Yes – from when Devex started to be spent.

C1.30 – can you please confirm if Project end date should be defined as the end of construction and entry into operations or end of asset lifetime?

When the asset is operational.

C1.31 – can you please confirm if Project investment refers only to Capex or also includes Repex operational costs?

Only Capex and Devex

C1.32 – contingent on clarifying the above, may be same date as completion of investment or end date ?

This answer should be the end of asset life (including decommissioning process)

40. Questions on Section C1.34-1.41 of Application Form 1 (Added 21 February 2023)

C1.35 similar to C1.27, can you please clarify what is meant by assumed grant, does this refer to other funding beyond OCSS or to netting off OCSS funds from Qualifying Coordinated Project (QCP) costs?

Please refer to the answer to C1.27 above.

C1.37 – This question is particularly ambiguous, should this be from the point at which a consortia agreement enters into effect, first QCP cost incurred, or defined otherwise?

First devex spend.

**C1.38 – contingent on the answer to the transmission asset Projects so linked to C1.30, COD date or decommissioning date? **

Same definition as C1.30 (operational date for non-OFTO contingent asset)

C1.39 – as above so linked to C1.31, should this be only for the original capex investment with separate date for Devex/point at which project costs are capitalised?

This ‘investment’ includes Capex and Devex so please give a date for devex spend ending, and a date for capex spend ending.

C1.40 – as above so linked to 1.32, expect to be either the same date as completion QCP investment or QCP end date

This question is end of QCP asset life (including decommissioning process)

C1.41 – can you please confirm if ‘Principal recipient of scheme funds’ refers to lead applicant or company receiving the highest proportion of funds within a consortia?
Refers to the lead Applicant

39. Section E1.8-1.10 – financial accounts for QCP and Projects – Application Form 1 (added 21 February 2023)

E1.8 – Qualifying Coordinated Project (QCP) budget. We assume this should be linked to answers for C1.34-41, is that correct?  

Yes, that’s correct.

Quarterly expenditure profile for the QCP at this stage in project development will be challenging to provide for all applicants, particularly where commercial-regulatory frameworks are still being developed, projects should be able to forecast costs but a quarterly profile for that spend will be only rough approximation (and that’s where data is available). 

Forecast quarterly profiles would be acceptable at the application stage.

Can you please clarify what is meant by revenue budget line, do applicants need to forecast revenues as well as costs and provide quarterly profiles?    

If revenue costs form part of the overall total budget for the QCP then these costs should be included in the quarterly expenditure profiles for the project.  Revenue and Capital costs should be split.

E1.9 – can you please clarify how to define ‘minimum necessary’?

This is the minimum amount of OCSS grant you require to deliver the project described – without which your project is not viable.

E1.10 – financial returns. Section E1 is to be completed by the lead applicant only but this asks for financial forecasts per Project – can you confirm if this is for the Projects or the QCP?

This is for the lead Applicant’s Project as well as the QCP. We at this stage do not require financial forecasts from the other consortia members

If it is to be completed for the Projects, we note that this will require commercially sensitive data unlikely to be shared across a consortia at this time – can you confirm if E1.10 could then be completed separately per Project?

See submitted question 38.