UK Plans to Change Power Network Costs to Spur Green Energy

August 1, 2013 by  
Filed under Green Energy News

Ofgem, the U.K. energy regulator,
plans to change how it charges generators to use electricity
networks as Britain seeks to integrate more low-carbon power.

Tariffs that utilities and suppliers pay to use the network
will better take into account the intermittent nature of wind
and solar under the plans published today. Currently, there’s no
difference between the payments made for a specified level of
production by fossil fuel plants that can generate around the
clock and some renewables that produce power unpredictably.

Ofgem’s plans are designed to accommodate Britain’s clean-energy ambitions as it seeks to curb emissions and meet demand.
The current system doesn’t reflect new types of generation that
the U.K. is adding as it seeks to get 30 percent of its power
from renewables by 2020 from about 12 percent now, Ofgem said.

“As a result of the rapidly changing generation mix,
networks are going through radical change,” Ofgem said on
documents posted on its website. The changes are needed to
ensure the system remains “fit for purpose,” it said.

The proposals would split tariffs into two components
including a so-called peak security portion that only non-intermittent generators such as gas plants would pay. The plans
will narrow tariff differences with charges in the north of the
U.K., decreasing as those in the south rise, Ofgem said.

The regulator cited an example where generators in the
north of Scotland may pay on average 13 pounds ($20) a kilowatt
less and those in southwest England may pay 5 pounds a kilowatt
more from next year when the plans take effect in April.

Scottish Islands

The changes would mean transmission charges would be lower
for Scottish islands than previously, though still remain higher
than on the mainland due to the cost of building sub-sea links.

“Ofgem’s decision to revalue the cost that energy
producers have to pay to deliver their power to the national
grid is great news for the renewable sector that will
particularly help wind generators in Scotland,” said Doug Parr,
chief scientist at environmental group Greenpeace.

The proposals will retain a system where generators are
charged more the further they are located from demand to reflect
the cost of running and upgrading networks, according to Ofgem.

To contact the reporter on this story:
Sally Bakewell in London at
sbakewell1@bloomberg.net

To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net

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