Major changes to network charging will have “far reaching” impacts on the UK’s decarbonisation progress, according to a new report.
The report, from not-for-profit energy organisation Regen, argues that changes in progress through Ofgem’s Targeted Charging Review (TCR) coupled with proposals in the Access and Forward Looking Charges Significant Code Review (SCR) could “fundamentally impact” new and existing customers on the distribution network.
It said some of the changes under Ofgem’s network charging review could be positive, such as enabling local matching of demand and generation.
However, the report also warns there could be negative consequences such as different locational charging zones conflicting with delivery of local net zero plans.
The report said some commercial and industrial customers may see higher network charges as a result of the TCR’s shift from variable to fixed costs, based on capacity bandings. However, the actual gross change will depend on the consumers relative utilisation of capacity, the extent to which they previously avoided Triad network charges and their ability to respond to new forward-looking signals.
Poppy Maltby, Head of Cities and Regions at Regen which worked on the report together with SP Energy Networks, said: “How and what people pay to connect to and use the networks will affect how rapidly the network infrastructure can update and evolve to support net zero."
“The far reaching impact that some of these national policies are likely to have on local areas means we are keen to see Ofgem having more engagement with devolved, local and regional governments to give these stakeholders greater say in how their local energy networks develop.”
SmartestEnergy’s Head of Pricing, Tom Putney, has recently provided an update on the TCR for I&C energy users and generators here: