"Far reaching" impacts on local decarbonisation must be considered in Ofgem's network charging reviews

17/03/2021

A new report, from not-for-profit centre of energy expertise Regen, argues that national changes to how we pay for our electricity networks will have “far reaching” impacts on local and regional governments’ decarbonisation efforts. The report aims to inform Ofgem’s network charging review.

The report, ‘Policy changes to network charging: a national methodology with big local impacts’, produced with the support of SP Energy Networks, assesses the impacts of Ofgem’s reviews of how customers pay for electricity networks, and whether recent and proposed changes will support decarbonisation and achieving net zero.

The key finding of the report is that new national methodologies for network charging could have significant impacts on local and regional aspirations for growth and decarbonisation. Analysis for the report suggests these impacts could be positive, such as enabling local matching of demand and generation, as well as negative, with potential consequences of the different locational charging zones conflicting with delivery of local net zero plans.

Poppy Maltby, Head of Cities and Regions at Regen, commented: “How and what people pay to connect to and use the networks will affect how rapidly the network infrastructure can update and evolve to support net zero. The far reaching impact that some of these national policies are likely to have on local areas means we are keen to see Ofgem having more engagement with  devolved, local and regional governments to give these stakeholders greater say in how their local energy networks develop.”

Graham Campbell, Head of Whole Systems and Commercial at SP Energy Networks, commented: “SP Energy Networks is committed to building and operating an electricity network that facilitates our transition to a Net Zero future. To achieve this we understand the role that network charges can play in influencing customer decisions regarding where and what to connect and how and when they use the network.

“Ahead of the ED2 price control period, our customers need clarity on charging and access arrangements in order that future investment decisions can be made. We urge Ofgem to publish its minded-to consultation on all aspects of the Access SCR so that our customers can have that clarity.”

The report also assesses the impact of network charging changes for Distribution Network Operators (DNOs), and finds that the changes will require DNOs to invest in physical assets and network monitoring as well as processes and capability to support net zero, new connections and flexibility.

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