Ofgem are proposing to change the structure of Use of System (UoS) charges; the process that governs the allocation of charges to network uses. These charges cover the cost of operating and maintaining the electricity network. These charges – levied according to size, connection voltage, and user location – also pay for a range of other activities undertaken by the system operator, distribution network operators, and transmission owners. Currently, a portion of these charges are disbursed as payments to certain network users and are referred to as Embedded Benefits. The proposed changes were published in Ofgem’s recent Targeted Charging Review (TCR) public consultation.
The proposed changes could have a significant impact on a project’s financial model, specifically to operating expenditure on annual grid connection charges for operational generators. It is a distinct possibility that, on average, UoS charges will increase for most generators as a result of these proposals and certain UoS charges, which are a currently a revenue source for embedded generators, could become a cost.
To better understand how your project could be affected and how TNEI can help you, contact us on 0191 2111404 or email@example.com.