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Investment in renewable energy to support UK decarbonisation targets may be undermined unless Ofgem’s proposed network charging reforms are reconsidered, an independent study by economic consultants Oxera  has found.
The report recommends the proposed reforms, part of Ofgem’s Targeted Charging Review (TCR) , should be further assessed to identify the likely impacts on deployment of renewable generation before being fully implemented.
Oxera found that elements of the TCR (specifically the ‘TGR/BSUoS’ reforms)  could:
While the TCR reforms are intended to reduce harmful distortions to competition and promote fairness in the interests of consumers, Oxera’s evaluation of Ofgem’s Impact Assessment found that a greater focus is needed to fully understand the impacts on renewables and decarbonisation to ensure that the TGR/BSUoS reforms do not become counterproductive to achieving Ofgem’s main objectives of affordability, security of supply and sustainability.
The impact of the reforms will also be dependent on the outcome of ongoing related work by National Grid on the TGR, by the BSUoS Task Force on BSUoS, and a separate Ofgem review of forward looking network charges, the first two of which are due to conclude this summer. Given the uncertainty over the impact of the TGR/BSUoS reforms and the potential interactions with these other workstreams, Oxera concluded it may be prudent for any final decision on TGR/BSUoS reform to be withheld until Ofgem has fully assessed the impacts of its proposals.
Lucy Whitford, Managing Director – Development and Construction, RES, said:
“Our electricity network needs to become a smart flexible system, fit for the future and utilising greater amounts renewable generation to provide homes and businesses with access to the cheapest forms of electricity – onshore wind and solar. We are committed to working with Ofgem and the industry to find a solution to network charging which delivers decarbonisation at the least cost to consumers.”
Notes to editors: