Posted on: 03/05/2016
Four trade bodies have joined forces to voice concerns over potential changes to embedded benefits for generators.
The Association for Decentralised Energy, Renewable Energy Association, RenewableUK, and Solar Trade Association have written to the Energy and Climate Change Committee over Ofgem's review of charging arrangements for distribution-connected generators and storage providers, which are also known as embedded benefits.
Embedded benefits refers to the exemption from various grid use of system charges for generators and storage connected to the distribution network, as opposed to those paid by transmission-connected parties.
In their letter, the trade bodies stress that embedded benefit is not a 'benefit', but a reflection that network charging is based on net flows.
“As distributed generators and storage do not use the transmission network, they should not pay for its use,” they stressed.
The letter said that the Government's intention behind the review of the Embedded Benefit was to help ensure the delivery of new transmission-connected gas CCGT power plants and damage the economics of diesel engines in the Capacity Market.
“However, there will be significant unintended consequences as this review will impact all 18 GW of distribution-connected generation, including wind, solar, biomass, energy from waste and both renewable and gas combined heat and power,” said the trade bodies.
“It will also significantly impact the economics of new energy storage investments. Network charging is a complicated and integrated area, with knock-on effects across the energy system. Any review should not be taken lightly or suddenly, but must instead be careful, holistic and systematic.”
Joined-up approach urged
With National Grid currently also reviewing charging arrangements, the trade bodies have urged a joined up approach.
“The decision to review the Embedded Benefit comes unexpectedly. This issue has been consulted on twice in recent years, most recently just two years ago, without any changes.
“To rush through changes now, in an attempt to increase delivery of new CCGT, would be a short-term response to a complicated, long term issue, and could cause significant harm to industrial manufacturers, distributed generators, and our long-term storage ambitions,” they warned.
> Read the letter here