A new permitting regime for medium combustion plants: what does it mean for operators?

From 20 December, combustion plants below 50MW thermal will be subject to the new environmental permitting regime in England & Wales. What do operators of generating plant need to know?

26 November 2018

On 20 December 2018, the first phase of the new environmental permitting regime for medium combustion plants in England and Wales will come into force. We are seeing some confusion among operators about the implications and the timescales, especially around generators, and so we recommend that all those with combustion plant take some time to understand the new regime.

The changes should be seen in the context of the drive to tackle well-documented issues with air quality in England and Wales and the concern that smaller scale combustion plant can still be significant contributors to local air quality. This explains why Defra has gone further than the underlying European rules require by also including some sub-1MW thermal generators, where emissions from diesel-fired assets are a particular concern. 

The new rules

The Environmental Permitting (England and Wales) (Amendment) Regulations 2018 (the 'Regulations') implement the EU-wide Medium Combustion Plants Directive 2015 (the 'Directive'), increasing regulation of medium combustion plants (of 1-50MW thermal) with the aim of reducing emissions across Europe. The Regulations also extend the permitting regime in England and Wales to regulate small generators of below 1MW thermal in certain circumstances. The new regime is implemented in staggered phases depending on the operational date, size and emissions levels of the plant.

Operators should note that all references to MW within the Regulations are to megawatt rated thermal input (not electrical output). This has been one source of confusion for some operators, especially those for whom the concept of environmental permitting itself is new.

Scope of the Regulations

The Regulations separately cover Medium Combustion Plants ('MCPs') and 'Specified Generators':

Medium Combustion Plants

An MCP is a combustion plant (subject to certain exclusions, but including most mobile plants) with a rated thermal input equal to or greater than 1MW but less than 50MW.

Specified Generators

A 'Specified Generator' is a combustion plant used for the purpose of generating electricity with a rated thermal input of:

  • ≥1MW and <50MW; or
  • in the case of a generator used for capacity or balancing services, <50MW.

This means that generators of less than 1MW thermal (which are not classed as MCPs) are regulated as Specified Generators if they participate in the Capacity Market or provide balancing services. This is in response to concerns around the high levels of nitrogen oxides (NOx) emitted by small-scale diesel generators, a large number of which participate in the Capacity Market - the Regulations specifically limit NOx emissions from Specified Generators.

Categories of plant excluded from the Specified Generator definition are different to those excluded from the MCP requirements. In particular, mobile generators are excluded (unless connected to an electricity transmission or distribution system, or at a particular site and performing the function of a static generator), as are emergency backup generators not tested for more than 50 hours per year.

There is significant overlap between the two categories: generally, all Specified Generators of ≥1MW will also be MCPs and must meet requirements relating to both. Generators should be aware of the different permitting deadlines and note the earliest applicable to their plant.

The new permitting regime

Medium Combustion Plants

MCPs coming into operation on or after 20 December 2018 will require a permit in order to operate.

Operators of existing MCPs, operational before 20 December, can benefit from transitional arrangements: plants with thermal input above 5MW must have a permit by 1 January 2024; and plants with thermal input between 1 and 5MW by 1 January 2029.

Specified Generators

Specified Generators are subject to complex transitional arrangements depending on which 'Tranche' they fall within:

  • Tranche A: broadly, existing generators which are operational prior to or subject to capacity or balancing services agreements entered into prior to specified dates (varying depending on thermal input capacity)
  • Tranche B: any generator which is not Tranche A.

However, any generator falling within the parameters of Tranche A which is the subject of a capacity or balancing services agreement entered into after 31 October 2017 and remaining in force after 31 December 2018 will be classed as a Tranche B generator and will not benefit from transitional arrangements.

Following a ruling of the General Court of the European Union, on 15 November 2018 it was announced that the Capacity Market is suspended until further notice. At the time of publishing this article, it is not clear what the impact of this will be on Specified Generators participating in the Capacity Market, but from a permitting perspective, the prudent approach is to assume the assets must still comply with the Tranche B requirements and timescales (the test being whether the asset is the subject of an agreement, whether or not that agreement is suspended).

Tranche B generators require a permit by 1 January 2019 (or, if later, by the date of operation or the date of entry into a relevant capacity or balancing services agreement).

Tranche A generators benefit from transitional arrangements and must comply by:

  • 1 January 2030, for Tranche A generators with thermal input less than or equal to 5MW
  • 1 January 2025, for Tranche A generators with thermal input above 5MW and which either (i) have NOx emissions of less than 500mg/Nm3; or (ii) operate for no more than 50 hours per year; or
  • 1 October 2019, for all other Tranche A generators.

Operators should refer to paragraph 3 of Schedule 35B to the Regulations for full details of the transitional provisions.

What will operators need to do?

Under the new regime:

  • All operators of MCPs and/or Specified Generators must hold an environmental permit from the relevant dates set out above.
  • MCPs must meet the EU-wide emissions limits specified in Annex II to the Directive, relating to sulphur dioxide, NOx and dust.
  • Specified Generators must meet the lower NOx emission limit of 190mg/Nm3; and must have no persistent visible emissions of dark smoke.

Permits will specify other ongoing monitoring and compliance requirements. Environment Agency Guidance on monitoring is available.

Practical considerations for operators

  1. What is the rated thermal input, operational status and current emissions level of your plant, and where does it sit within the parameters of the Regulations?
  2. If your plant has not yet been commissioned, is there an advantage to you in commissioning before 20 December 2018, in order to benefit from transitional arrangements?
  3. When do you need to make your permit application?
    • Bear in mind the relevant deadlines set out above and whether you must meet the deadlines as an MCP, Specified Generator or both: in particular, be aware that existing MCPs providing capacity or balancing services may require a permit from 1 January 2019.
    • Allow sufficient time for your application to be processed as determination can take several months (allow for the fact that the Environment Agency is somewhat stretched at the moment).
  4. What do you need to do to comply? Operators should review in advance the published emissions limits and guidance on monitoring and record-keeping requirements.

How can Burges Salmon help?

Burges Salmon advises on a wide range of energy and environmental issues and are market-leading specialists in environmental permitting. If you are interested in discussing these issues further please contact Simon Tilling or Nick Churchward.

This article was written by Simon Tilling, Nick Churchward and Charlotte Robinson.

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