OFGEM, the UK gas and electricity markets regulator, is intending to change the way use of system charges are levied and, as members with grid connected projects will know, is minded to remove ‘embedded’ benefits which are currently paid under PPA agreements to generators on the distribution network. The proposed new charging structure is also likely to marginally increase the costs associated with onsite generation. We have responded to this consultation with Community Energy England and Community Energy Wales to express concern that this will further erode the financial viability of community energy projects – our joint response is available here. OFGEM are likely to make a decision on this later this year.
In the meantime, a new consultation process has begun on how the charging framework should change to take account of the way the grid is evolving. This has just begun and CES has been invited to join a ‘challenge group’ to input to the decision making.
At a recent OFGEM conference in Glasgow, we questioned the OFGEM Chairman Martin Cave on why OFGEM seems to be progressively making it harder for small scale generators to enter the market, especially given the Energy Minister’s Claire Perry’s recent statement suggesting that community energy is “a key cornerstone of government’s ambition for transition to a low-carbon, smart energy system….”. OFGEM’s response is that they are removing ‘distortions in the market’.