Poppy Maltby, senior project manager, looks at how the emerging themes of the Access SCR may impact decarbonisation
Regen has been following Ofgem’s work on network charging for the last three years and, notwithstanding the last-minute delay of Ofgem’s consultation into 2021, the Access SCR is now tantilisingly close to a minded-to decision.
The time this process has taken (and continues to take) reflects the eye-watering complexity of the existing charging system, which combines numerous charging methodologies, baffling acronyms, along with dense electricity network parlance. For those that need the 101, Ofgem have done their best to explain their intentions and results through their website at http://www.chargingfutures.com/.
The Access SCR effectively mixes this complex charging system with competing energy interests wrangling over the eternal question ‘who pays?’. Should existing customers contribute to the cost of new ones? Should demand customers pay to connect more renewables?
Our latest webinar with Ofgem was looking at how the emerging themes of the Access SCR may impact decarbonisation and we heard from a fantastic set of speakers representing renewables, distribution networks and flexibility markets (you can watch the webinar here).
The good news is that Ofgem is seriously considering reducing the cost of connections that require reinforcement on the distribution network, though this could be more beneficial for larger connections than smaller ones. In addition to this, both demand and generation customers are going to pay more locational charges, reflecting the relative cost of their local networks.
Many of the attendees were surprised by the fact decarbonisation did not get a mention in Ofgem’s explicit objectives. Being relatively close to the process, I have faith in the people and intentions of the review; it clearly could provide a positive outcome for decarbonisation. It is undeniable however, that there are likely to be both positives and negatives. Who wins and who loses will be a case of how these balance out, and until we see decisions and numbers on a page, we don’t know if decarbonisation and renewables will be a net winner or loser.
As a result, I share our attendees’ nagging doubts on decarbonisation. As the review has progressed we have been asked to agree in principle to seemingly innocuous economic logic that efficiency, level playing fields and least cost are all outcomes in themselves. In pure economic terms, smaller-scale renewable generation is a more costly, less efficient way to generate electricity, but in social terms it can be far more valuable. This ‘economics first’ approach also assumes that we have the luxury of choosing one slightly cheaper path over another, whereas the reality in the face of a climate emergency is that we need to do everything, and more, right now.
To remove this disquiet, we at Regen feel strongly that despite the stepping up of decarbonisation rhetoric in their processes including this one, Ofgem’s remit needs to be formally amended from ‘protecting customers from decarbonisation’ to proactively helping networks deliver it.
On a more cheerful note, Ofgem mentioned that, as well as their minded-to decision, they will also announce a ‘roadmap’ that will outline areas where they expect the charging methodologies to continue to evolve. So if we are going to be ready in time for the start of ED3 in 2028, we’d better start that process now….