PRESS RELEASE: Statement on Ofgem Targeted Charging Review: minded to decision and draft impact assessment

Solar Trade Association
28 November 2018
For Immediate Release

Responding to Ofgem’s minded-to decision on reform to residual charges and embedded benefits, Solar Trade Association Chief Executive Chris Hewett said:

As the consultation document recognises, ‘any method of residual charging will lead to some distortions’. It is important that those distortions don’t fall on innovative individuals and companies that are investing for a cleaner, cheaper and smarter energy system.

We will look at this complex consultation in detail, but we are naturally concerned that Ofgem’s own analysis shows that its approaches will particularly impact homes and businesses with solar power.

The regulator’s preferred option, to move away from consumption-based to fixed charges means that the most profligate energy users will be rewarded, while those who take action to effectively manage and reduce their electricity consumption are penalised. Under this option the hardest-hit sector will be the thousands of forward-thinking businesses across Britain who invest in storage and on-site generation.

We are concerned the regulator is taking a short-sighted approach and that the tremendous whole system value of flexible, low-carbon, onsite energy generation is not yet being reflected back to our innovators and risk-takers.

We would like to see Ofgem carry out a full assessment of those system benefits and introduce charging reforms concurrently so that the overall net treatment for innovators in the system is positive. The current piecemeal approach means we cannot assess the net overall effect of charging reforms and where we may end up, and this contributes to investment uncertainty. Deterring investment in smart energy technologies will ultimately end up costing all consumers more in the medium to long-term, including the most vulnerable households.

ENDS

 

Note for editors:

The Targeted Charging Review is an ongoing consultation process undertaken by Ofgem to reform network charging. This consultation proposes reforming how the costs of the electricity networks, in particular ‘residual charges’ are recovered. The consultation is proposing to apply residual charging only to end users and has narrowed options down to two approaches on how to distribute these costs. Residual charges are broadly used to recover sunk or fixed costs and largely relate to costs that have already been incurred, such as past investment in underground cables.

 

For further information or to request an interview, please contact:

Name: Leonie Greene

Title: Director of Advocacy & New Markets

Main line: 0203 637 2945

 

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, and have a proven track record of winning breakthroughs for solar PV and solar thermal.