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Ofgem Shares Details of Controversial Grid Charge Scheme Reforms

22 Nov 16:00 by Steve Walia

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Ofgem, the UK energy regulator, is forging ahead with controversial plans to reform the grid charge scheme. Renewable energy groups say that the move will undermine the ability of green energy projects to come online without subsidies.

The Targeted Charging Review will see fixed charges being levied upon all businesses and households to grab back residual charges. At the same time, a number of embedded benefits for energy generators will be done away with altogether.

For example, projects which generate less than 100 MW will no longer be eligible for supplier payments in return for cutting Transmission Demand Residual payments. The scheme reforms have been planned in order to save British energy consumers up to £300 million annually, and Ofgem plans to roll them out from 2021.

The regulator said that the new scheme for fixed charge applications would provide a fairer way of recovering residual charges.

However, green groups said that changes to embedded benefits would simply lead to negative impacts for smaller distributed generators. The Solar Trade Association has calculated that the change could result in a likely loss of £2.50 per MWh in revenue for solar energy.

The REA also said that the announcement would hinder progress towards a more flexible energy system. It said that solar and onshore wind were becoming increasingly affordable and widely used, meaning that - in conjunction with fossil fuels going offline - the future of the grid needed to be flexible and fully incentivised to encourage better demand response and energy storage.

In response to criticism to changes over the balancing services charges for smaller generators, Ofgem has asked the National Grid to establish a taskforce to work out who would be most appropriately placed to pay the charges, with findings expected in the spring.