The issue of how to pay for Britain’s high-voltage cables and wires has been brewing for years as more homes and companies avoid paying grid maintenance costs by using power they have generated themselves, such as rooftop solar power or diesel generation.
Major energy companies, rival suppliers and tech-based startups are all hoping to tap the emergence of new ‘green’ energy solutions, such as solar panels and electric vehicles, to create a booming market in the UK.
The latest modern trend has raised serious concerns that energy users who cannot avoid paying these charges will be forced to pick up the slack of ever growing costs, leading to cripplingly high energy bills.
An example of this would be to consider your own wind turbine, which could save you money on your energy bills. However, this is not a device you can simply install straight out of the box, it requires work first and some significant modification. It’s better and somewhat easier to buy a turbine then modify it rather than building one from scratch.
If you’re a small business, you might want to look away now. This could be devastating for millions of smaller industry firms, as they cannot afford to invest in their own power projects. However, it would also hit high energy users such as factories and steel plants, which employ hundreds of thousands of people and need access to the grid to operate.
The Ofgem regulator is hoping that bold changes to the charging regime will help level the playing field when it comes to the dilemma, without scuppering vital investment in small-scale power sources.
A fixed rate for all energy users is another option that many may consider, a rate based on consumption minus what is produced on site, and a review of the current regime.
Duncan Sinclair, an energy expert at Baringa Partners, warned that the “pretty profound change” put forward by Ofgem was sorely needed, but must be done in a way that maintains investor confidence.
“I don’t envy Ofgem’s position. They’re damned if they do, and damned if they don’t,” he said.
Proponents of off-grid power have already warned that the move could severely damage the investment case for off-grid generation, which plays a huge role in helping the UK secure its energy supplies at low cost.
Tim Rotheray, the head of the Association for Decentralised Energy, said Ofgem needed to “fully, carefully and methodically” consider the costs and benefits that business energy users provide to all consumers over the long term by reducing their use of the electricity networks.
“Otherwise Ofgem will be asking business users to pay over the odds for networks they barely use, and industrial sites will see large, unfair increases in their electricity bills in contradiction with the aims of the Government’s energy cost review,” he warned.
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