Ofgem Decision Predicted to Cut Revenues From Solar

FOLLOWING A REVIEW carried out by energy regulator Ofgem, solar panel owners are set to lose revenue as new fixed tariffs are brought in.

Ofgem revealed in its final decision on its Targeted Charging Review. The changes will include fixed charges applied to all households and businesses to recuperate their residual charges, which are part of network costs.

There will also be a partial reform of so-called ‘Embedded Benefits’ which will mean smaller generators lose out.

Set to be implemented in 2021, the Solar Trade Association estimates that this partial reform could mean a potential loss of about £2.50 per MWh as well as revenue for solar photovoltaics (PV). Whilst less severe than full reform, it will hit subsidy-free solar development, which is already tight.

Under the current system, residual charges are paid per kilowatt hour used, meaning that consumers inevitably save when reducing usage.

Climate Change

The new system will implement a fixed charge for every household and business, which will mean those who have taken action to curb usage, by taking up energy efficiency measures or investing in self-generation, will face higher bills, while users with the highest consumption will see reductions in costs.

Chris Hewett, CEO of the Solar Trade Association

STA Chief Executive Chris Hewett said: “Despite their own revised analysis highlighting that these changes risk delaying deployment of subsidy-free low-cost renewables, Ofgem are pressing ahead with changes that make net zero harder to reach, not easier.

“With the urgency of climate change, it is abundantly clear that the regulator’s current objectives are now outdated and absolutely vital that the next government addresses this.”

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