Ofgem has released its long-awaited Targeted Charging Review (TCR), which outlines some key changes to electricity network charges.
One of the biggest changes is that residual charges will be delivered via a banded fixed charge framework, as opposed to the current system which sees end users charged depending on how much power they take from the grid.
In addition, amends to embedded benefits will remove the ability for suppliers to reduce their liability for balancing services charges by contracting with small distributed generators. An exemption from paying balancing services charges for small distribution generators is also to be the subject of a second Balancing Services Charges Taskforce.
Commenting on the news, Steve Shine, Anesco executive chairman, said: “We feel that the blanket residual demand charges while delivering lower costs to consumers in the short term, could increase the cost to the consumer in the long run. In our view, Ofgem is taking a risk by imposing such a reform. It could have serious implications for the UK’s ability to reach its carbon reduction targets, as it has the potential to deter investment.
“This is a clear example of why we need joined up policy and thinking if we’re to achieve net-zero. In seeking to find an outcome which is ‘fair’ Ofgem has inadvertently removed a key incentive for consumers to install renewable energy sources. This is not a problem if Ofgem, BEIS and the treasury introduce new incentives for consumers to install renewables – but that must be done swiftly.
“For utility scale assets there is little change but again uncertainty remains, as we await the outcome of the Balancing Services Charges Taskforce.
“Businesses such as ours will need to stay agile and to consider how we design our assets, to provide an investment case. This will be vital if the UK is to meet its carbon reduction targets. As will ensuring that policies are clear and all political and regulatory bodies are committed to pursuing a common aim.
“We will continue to petition BEIS, National Grid, Ofgem and the treasury to provide certainty rather than subsidy, as that is how we will create a sustainable market for renewable and flexible technologies in the UK.”
Established in Reading in 2010, Anesco is the UK market leader for energy storage. The company has developed more than 100 solar farms to date, while its renewables operation and maintenance arm has nearly 1GW of renewable energy under management.
You may also be interest in: