PRESS RELEASE: Industry response to Ofgem’s RIIO-ED2 2023 announcement

Solar Trade Association
Immediate Release
18 December 2019

Today Ofgem has announced plans to push electricity suppliers to invest more in developing a carbon neutral energy system in the next price control period, in 2023, following pressure from industry and business groups to do more to accelerate decarbonisation of the energy system. [1]

STA Chief Executive Chris Hewett said: “There is clearly appetite within Ofgem to fast-track the decarbonisation of the energy system, though it continues to be constrained by an outdated mandate. We implore the government to address this urgently by revising the regulator’s remit to incorporate net zero. In the meantime, this welcome news indicates the direction of travel that all players in the energy sector must move in.”

The STA, alongside a number of other organisations, including the Confederation of British Industry (CBI) have criticised the regulator’s mandate, which has not changed since 2011, for being completely out of step with the UK’s legally binding net zero target. Both bodies have emphasised the need for the Government to confer new statutory powers in order to enable Ofgem to accommodate greater deployment of renewables in the UK. [2] [3]

Onshore renewables such as solar and battery storage will be essential in decarbonising the UK economy, and the Committee on Climate Change estimates that solar must account for at least 40GW of the energy mix by 2030 in order to remain on track to reach net zero greenhouse gas emissions by 2050. [4]

Ofgem was heavily criticised recently over its Targeted Charging Review, which has resulted in a decision to apply fixed charges to consumers in order to recuperate residual charges in the future,  and also to partially reform so-called ‘Embedded Benefits’ which will see smaller distributed generators lose out. The former will remove part of the incentive for saving energy via efficiency measures or installing onsite renewables, while the latter could entail a potential loss of ~£2.5/MWh in additional revenue for small-scale solar PV generators. [5] [6]

 

ENDS​

 

Editors notes:

[1] Ofgem – RIIO-ED2 Framework Decision: https://www.ofgem.gov.uk/publications-and-updates/riio-ed2-framework-decision

[2] Solar Trade Association – General Election 2019: Priorities for the next Government: https://www.solar-trade.org.uk/general-election-2019/

[3] Solar Trade Association – Industry calls for post-election policy drive to match parties’ net-zero ambition: https://www.solar-trade.org.uk/industry-calls-for-post-election-policy-drive-to-match-parties-net-zero-ambition/

[4] Committee on Climate Change – Net Zero – Technical Report: https://www.theccc.org.uk/publication/net-zero-technical-report/

[5] Ofgem – Targeted Charging Review: Decision and Impact Assessment: https://www.ofgem.gov.uk/publications-and-updates/targeted-charging-review-decision-and-impact-assessment

[6] Solar Trade Association – Response to Ofgem’s TCR decision: https://www.solar-trade.org.uk/sta-response-to-ofgems-tcr-decision/

 

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Background on the Solar Trade Association:

The mission of the Solar Trade Association is to empower the UK solar transformation. We are paving the way for solar to deliver the maximum possible share of UK energy by 2030 by enabling a bigger and better solar industry. We represent both solar heat and power plus energy storage, and have a proven track record of winning breakthroughs for all three technologies.