Lenders and capacity providers in the UK’s Capacity Market will want to take note of new procedures introduced by National Grid in its role as the Capacity Market’s Delivery Body.
The Capacity Market aims to incentivise investment in new electricity generating capacity and ensure reliable electricity supplies for end users. Where a Capacity Provider has third party debt financing, the lender will want to take security over the capacity payments it is entitled to receive by registering a Security Interest in respect of the relevant Capacity Agreement on the Capacity Market Register.
Recently National Grid, as Delivery Body, has changed the way such Security Interests are to be registered.
Previously lawyers acting for lenders (the beneficiaries of the Security Interests) have undertaken registration on behalf of their clients, in line with the other common security registrations at Companies House and where applicable, the Land Registry. All that was required was to submit by email a notice of the Security Interest in a form agreed by the Delivery Body (the Security Interest Notice). The Delivery Body now requires that Security Interest Notices are registered by the relevant Capacity Provider itself, via the online portal registration system known as the EMR Delivery Body Portal (the Portal).
This means that beneficiaries of the Security Interests, or lawyers acting on their behalf, are no longer able to manage this process, so the Security Interest Notice will need to be submitted to the Capacity Market Register via the Portal by the Capacity Provider or their lawyers (if they are appointed as an agent to act on behalf of the relevant Capacity Provider).
Once a Security Interest Notice has been uploaded to the Portal the Delivery Body will receive notification and following this the Delivery Body will be required to approve (or return) an application to register that Security Interest and update the Capacity Market Register accordingly.
Going forward, it is likely that this process will be reflected in any relevant loan or security document to ensure that, where applicable, borrowers and developers are required to submit a Security Interest Notice to the Delivery Body (or provide evidence of this to the beneficiaries of the Security Interest) as a condition to the terms of the financing.
If you are a Capacity Provider and you have not already signed up to the Portal, information on how to register via the company registration form can be found here. The Delivery Body has also published guidance on how to upload a Security Interest which you can access by clicking here.
If you are experiencing any issues with the Portal, the Delivery Body can be contacted via email at EMR@nationalgrid.com or via telephone on 01926 655300.
Defined terms used in this blog post are taken from the consolidated version of The Capacity Market Rules 2014 published on 14 July 2016, or as introduced by the author.