Utility Week

UTILITY WEEK | 29TH NOVEMBER - 5TH DECEMBER 2019 | 15 Policy & Regulation This week Ofgem to implement fixed residual charges Regulator says fixed charges on consumers who generate electricity will save £300 million a year Ofgem is pressing ahead with plans to recover residual electric- ity network costs through fixed charges on consumers, despite strong opposition. The decision is the outcome of a review of residual network charges and embedded benefits, known as the Targeted Charging Review, which was prompted by concerns that the current arrangements allow some consumers to avoid paying their fair share. "More and more businesses and households are generating their own electricity on site, including from renewables such as solar power," wrote Ofgem chief executive Dermot Nolan in the foreword to the decision document. "However, these consumers still use the grid, for example on dark winter evenings when solar power cannot generate electricity. "By taking less electricity from the grid, by generat- ing their own electricity or taking other action, some businesses and households currently avoid paying (some or all of) these charges, despite being able to draw on the networks as and when they need," he added. "The cost that they avoid falls on those that are not able to take similar action." Ofgem said the changes will save consumers as a whole £300 million a year from 2021 when the first reforms are due to take effect. It predicted the total sav- ing out to 2040 will be between £4 billion and £5 billion. The reforms have faced strong opposition from distributed generators, who claim they will undermine efforts to create a smarter, more flexible power grid. TG GAS Gas energy security must be protected Gas users and developers have laid out a three-point plan to ward off the threat of greater energy price volatility. The Gas Security Group (GSG), which represents major industrial users of gas and infra- structure developers, has called for policies that will maintain secure supplies while achieving lower carbon emissions. It calls for investment in: • Gas-fired power generation to compensate for the demise of coal-fired generation, uncer- tainties over the future of new nuclear, the expansion in "intermittent" renewables and the limitations and costs of battery storage; • Additional storage to com- pensate for fluctuations in the imports that make up an increasing share of the UK's gas supply, as well as the additional capacity required to support the growth of low- and zero-carbon gases. The GSG is also calling on the next government to introduce a new industrial gas demand-side reduction scheme that will pro- vide industry with a commercial incentive to curtail its demand at times of system stress. Changes to this mechanism will reduce the threat of gas shortages and energy price spikes by providing greater short-term supply flexibility. Clive Moffatt, chairman of the GSG, said: "With electrification and greater efficiency, annual gas demand is likely to fall, but the seasonal peak gas demand for heat and power will rise and the resulting market volatility will increase sharply. "It is in the interests of UK plc, and all consumers, that the next government makes energy security and affordability a pri- ority during what will be a long and challenging transition to a net-zero emission target." ENERGY Plaid Cymru wants £15bn for green growth in Wales Plaid Cymru has called on the UK government to allocate an additional one per cent of GDP to invest in green infrastructure over the next decade. In its manifesto for the 2019 general election, the Welsh nationalist party called for the spending boost as part of a green industrial revolution for Wales. The manifesto estimates that the one per cent extra of GDP would translate into an additional £15 billion spending on green jobs, transport and energy in Wales alone. Plaid said it also would press the Treasury to allow the Welsh government to borrow an addi- tional £5 billion for investment in infrastructure. Solar power: consumers still use grid in winter Political Agenda David Blackman "The PM cannot wing the transition to a net-zero UK" Lacking in detail and handed in at the last minute. No, we're not talking about one of Boris John- son's columns when he was a journalist. Rather, it's a critique that could be levelled at the Con- servative party manifesto, which was finally unveiled on Sunday. The brevity of the manifesto may indicate that the party is run- ning out of ideas a¤er nine years in government. A more charitable interpreta- tion is that it was designed to avoid repeating the mistake of find Labour's nationalisation plans have been rejected. However, the opposition parties are presenting a more concrete set of proposals about how to achieve net zero than the party currently in pole position to deliver it. If Johnson wins next month, utilities will be hoping he has more up his green sleeve than he is letting on. Unlike those news- paper columns, the transition to a net-zero UK is not something that the PM will be able to wing. 2017's more detailed document, which many blame for the loss of the Conservative majority. The problem though, when it comes to addressing the energy and climate change debate, is that detailed thinking is needed to work out how the UK is going to meet the ambitious target of net-zero emissions by 2050. While the middle of the cen- tury may seem like a long way off, many of the building blocks for hitting that target must be laid over the next decade, half of which will be taken up by the parliament we are about to elect. The energy sector will no doubt breathe a sigh of relief if we wake up on 13 December to

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