Ofgem TCR decision to undermine renewables deployment and grid flexibility
- Ofgem releases final decision on their controversial ‘Targeted Charging Review’ (TCR)
- TCR damaging for the development of a more ‘flexible’ electricity system and will negatively impact the small-scale renewable power generation sector
- TCR will negatively impact homes and businesses who have taken steps to install low-carbon technologies on-site
- Decision likely to undermine business case for batteries and other forms of storage until ‘Access and Forward Looking Charges’ review currently scheduled to be implemented in 2023
Ofgem has today released its final decision on the Targeted Charging Review (TCR), which, in the view of the REA, will undermine subsidy-free renewable power deployment and reduce investment in ‘flexible’ energy technologies.
The industry has long called for the TCR to be delivered in tandem with Ofgem’s Access and Forward Looking Charges review. Running and implementing these changes to how power generators pay to access and use the electricity grid separately will impact investor confidence and undermine the business case for renewables. There is expected to be a one-year gap between when the two reviews are implemented.
It is not clear that the results of the Access and Forward Looking Charges review will be enough to compensate for the damage done to the market from the TCR.
Dr Nina Skorupska CBE FEI, Chief Executive of the REA commented:
“Ofgem’s Targeted Charging Review (TCR) has been closely tracked by the REA as its outputs will have major implications for the move to the more decentralised, flexible energy system needed if the UK is to achieve Net Zero.
“The rapid pace of renewable energy deployment over the past decade has reshaped the UK energy market. The industry accepts that as a result, the system for how generators pay to connect and use the grid needs to change.
“As ‘embedded generation’ types such as onshore wind and solar become ever-more affordable and widely deployed, and fossil fuel generators come offline, the future grid charging and access regime will need to properly incentivise ‘flexibility’ technologies – mainly energy storage and demand response.
“Although there are a few consolations for larger generators, today’s announcement undermines the move towards a more flexible power system. These reforms mean that businesses and homes which have taken responsible steps to install low carbon technologies will effectively pay more to use the wires needed to support the system.
“Our proposal from the start was for the TCR to be progressed in combination with another set of proposed changes, called the review of ‘forward looking charges.’ Tackling and rolling out these two sets of proposals in tandem would have allowed the whole picture of grid charges to be progressed at the same time in a cohesive manner. This has not happened, however, and 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.
“Ultimately, this decision will negatively impact subsidy-free renewables and until the ‘forward looking charges’ review is enacted we risk further shrinking the pipeline of new projects.”
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Notes to editors
- Electricity exports to the distribution networks have doubled between 2012 and 2018, reaching 45TWh. 39.8TWh of the total 45TWh exported to the GB distribution networks in 2018 is from renewable sources, ranging from wind to waste-to- energy. (Source: Flexible Futures report)
- Ofgem’s Targeted Charging Review proposals can be found here: https://www.ofgem.gov.uk/electricity/transmission-networks/charging/targeted-charging-review-significant-code-review
- A recent REA report ranked the UK 8 out of 9 for flexibility in a review of nine leading northern European electricity markets
About the REA
The REA is the UK’s largest trade association for renewable energy and clean technologies with around 550 members operating across heat, transport, and power. The REA is a not-for-profit organisation that represents renewable energy and clean technology companies operating in over fourteen sectors, ranging from biogas and renewable fuels to solar and electric vehicle charging. Membership ranges from major multinationals to sole traders.
For more information, visit: www.r-e-a.net