Ofgem unveils renewables incentivisation plan
British energy regulator Ofgem on Monday reaffirmed its commitment to facilitate the connection of renewable generation projects to the low voltage distribution network.
The regulator said that the regulatory framework it has developed will “provide incentives for distribution companies to take a proactive and positive approach to generators wanting to connect”. It added that it would provide strong protection against any downside risk they may face.
Distribution companies will be guaranteed 80% pass-through costs of connecting distributed generation, plus £2.50 per kW of capacity connected per year, Ofgem said. In theory this would enable distributors
to earn a maximum of twice their normal cost of capital, it said, “if they invest efficiently and effectively”.
Ofgem added that it would introduce incentives to stimulate distributors’ investment in research and development. Ofgem chairman Sir John Mogg said: “Technical innovation should form part of the network companies’ response to the greener energy challenges ahead. The Innovation Funding Incentive and Registered Power Zones will help make the distribution system more efficient.”
According to independent analysis conducted on behalf of Ofgem, the schemes could deliver savings of £500 million, compared to the cost of funding, to be met by generators and customers, of less than £100 million over the five years of the distribution price control, to be implemented from April 2005. GR
Other Related Stories
