Mr. John Melvin:

The Deputy is correct that an enormous difference can be triggered by relatively small changes in the efficiency of the plant. As noted in our presentation, the threshold set out in the European legislation is that the overall efficiency of the plant must be greater than 80%. If, for example, the efficiency of a plant similar to that proposed by Mayo Renewable Limited declined from 80% to 79%, by virtue of the way the legislation is written, it would be determined that rather than 100% of the electricity being HE CHP, as is the case once the 80% threshold has been met, approximately 50% of the plant's electricity would be HE CHP because the 79% efficiency rate falls below the threshold. The legislation is written in such a way that if the efficiency target is exceeded, the percentage of HE CHP electricity produced in the plant will be set at 100%, whereas if it trips just below the efficiency target, a different set of calculations comes into play. In the case of a plant such as Mayo Renewable Limited, by virtue of the legislation and the formula it provides, the maximum percentage of HE CHP electricity thereafter would be between 50% and 53%.

On the risk that the entity making the investment makes, our decision is very clear that where the plants are not yet installed or operational, a planned plant certificate in no way guarantees future evaluations will result in continued certification. That is made very clear in our 2012 decision. The reason is that we are obliged under legislation to examine annually how much of the electricity in a site warrants the HE CHP certification. That will vary from year to year. If the efficiency drops below 80% at any point, the amount of HE CHP electricity drops by virtue of the formula in the European legislation.