Renewable energy groups have criticised Ofgem for pressing ahead with its Targeted Charging Review (TCR), arguing they will stifle the business case for subsidy-free renewables, energy storage and flexibility services.
The energy regulator will effectively remove Transmission Generation Residual payments for larger generators and reduce Embedded Benefit payments for some smaller generators.
After examining residual charges for maintaining pylons and cables, it will also replace the current regime with fixed charges on households and businesses.
Ofgem said the decision is part of a series of reforms that will ensure the costs of the network are kept as low as possible and shared more fairly across its users.
The Renewable Energy Association’s call for the TCR to be run in tandem with the 2023 Forward Looking Charges Review was dismissed, prompting Chief Executive Nina Skorupska to warn: “We now face a period of investor uncertainty and a significantly weakened business case for battery storage and the other crucial systems we need to ensure Britain has a modern power grid.”
Trade body RenewableUK called for Ofgem’s remit to be altered, with Head of Policy & Regulation Rebecca William adding: “Reforming Ofgem so that it takes account of the need to reach net zero rapidly and cheaply would unlock further investment to build the flexible, smart, clean energy system of the future – vital infrastructure which the UK needs to function in the decades ahead.”