Posted on: 14/05/2019
The deployment of subsidy-free renewables could be pushed back by up to five years if Ofgem presses ahead with its Targeted Charging Review, according to a new report.
Aurora Energy Research said the proposed changes under the review, under which the regulator is looking to spread the cost of network infrastructure via fixed charges instead of the current system relating to electricity consumption, would damage onshore wind and solar.
Aurora said under its estimates deployment of solar would be 5GW lower by 2035 as a result of the changes, whilst onshore wind deployment would decrease by 1GW, the report found.
Holding back storage
Aurora also said the changes will favour low-efficiency combined-cycle gas-fired turbines (CCGTs).
It said demand-side response, batteries and other forms of smart infrastructure would also be held-back by the proposals. In contrast, older CCGTs would continue to operate for longer.
The report considered the knock-on effects of the changes, as well as their ‘first-order’ consequences.
Aurora said its assessment of data has produced different results to Ofgem’s.
Weijie Mak, Project Leader at Aurora and co-author of the report, said: “Ofgem’s latest proposals surrounding network charges could have a very significant impact on the Great British power market."
“These changes would have a significant impact on the returns for power utilities across a wide spectrum of asset classes."
“We understand the need for Ofgem to ensure network efficiency and consumer protection, however there is a risk that pursuing too narrow a focus on these objectives could undermine the transition towards cleaner and smarter forms of power generation, as well as undermining investor confidence.”
Six trade bodies – the Association for Decentralised Energy, the British Electrotechnical & Allied Manufacturers’ Association (BEAMA), RenewableUK, the Renewable Energy Association (REA), the Solar Trade Association (STA) and Tech UK – have already written to Energy Secretary Greg Clark calling on him to review the whole process of network charging reform.