Do Green Tariffs Avoid the Climate Change Levy?

Renewable electricity lost its Climate Change Levy exemption in 2015. Why a green tariff pays CCL, and why a solar PPA supplied directly can avoid it.

It is a common assumption that buying renewable electricity takes it out of the Climate Change Levy. It used to, but that ended in 2015, and the reason explains why a solar PPA can save the levy when a green tariff cannot.

How the old exemption worked

Ofgem used to issue Levy Exemption Certificates to eligible renewable and combined heat and power generators. The certificates passed through to suppliers as the evidence HMRC needed that the electricity supplied to a business customer was exempt, and the customer at the end of the chain got the benefit. A green tariff backed by these certificates really did avoid the levy.

What changed

The scheme is closed. Certificates were only issued for renewable electricity generated before 1 August 2015, and the transitional arrangements that let suppliers use them ended on 1 April 2018. Today GOV.UK lists electricity generated from renewable sources before 1 August 2015 among the exemptions, which by definition excludes anything a supplier sells you now.

Sources: Ofgem — Climate Change Levy (CCL) exemption; GOV.UK — Climate Change Levy. Verified 6 Oct 2026.

Why a green tariff now pays CCL

A green tariff is a supply by a licensed electricity supplier, backed by REGOs to evidence its renewable claim. HMRC treats renewable electricity supplied by a utility as a taxable supply, so the levy is charged at the main rate, £0.00801 per kWh from 1 April 2026, exactly as it would be on any other tariff.

What to compare instead

• The delivered price, including the levy. A green tariff's unit rate plus CCL is the figure to set against an on-site PPA tariff, which carries no levy when supplied directly.
• What the certificates prove. A green tariff's REGOs evidence where the power came from; an on-site PPA can give you both the power and, if the contract transfers them, its REGOs.
• How much of your demand each covers. An array only covers the daytime share, so many sites pair a solar PPA with a supply contract for the rest.

Why a solar PPA can still avoid it

HMRC's guidance draws the line at the supply route, not the source. An auto-generator or an exempt unlicensed supplier has no CCL to account for on self or direct supplies of renewable electricity. An on-site solar PPA, where the provider's project company supplies your building directly, fits that description; a sleeved PPA, delivered by a licensed supplier, does not. The full breakdown by structure is in our guide to the climate change levy exemption question.

Sources: HMRC Excise Notice CCL1/3, section 3.12 (updated 24 March 2026); HMRC — Climate Change Levy: changes to rates from 1 April 2026.

The levy is only one of the non-commodity costs on a business electricity bill; network and policy charges add more, and on-site generation affects each of them differently.