UK regulator Ofgem’s targeted charging review (TCR) proposals will lead to a 6GW reduction in onshore wind and solar installation by 2035, according to energy consultancy Aurora.
Aurora said its study of Ofgem’s overhaul of British network charges announced last November found subsidy-free renewable deployment would be delayed by between two and five years if the TCR is implemented as currently envisaged.
Deployment of solar PV would be 5GW lower by 2035 as a result of the changes due to come into force from 2020, it claimed, while onshore wind build-out would decrease by 1GW.
The findings are in contrast to Ofgem’s own impact assessment that assumed renewables deployment would remain unchanged.
Ofgem’s proposals would remove ‘embedded benefits’ for smaller generators connected to the distribution system and remove a credit currently paid to all transmission-level generators.
Aurora found offshore wind developers participating in Contract for Difference auctions would have to increase bids by £2 per megawatt-hour as a result of TCR to ensure the same internal rate of return.
Aurora project leader and co-author of the report Weijie Mak said: “These changes would have a significant impact on the returns for power utilities across a wide spectrum of asset classes.
“We understand the need for Ofgem to ensure network efficiency and consumer protection, however there is a risk that pursuing too narrow a focus on these objectives could undermine the transition towards cleaner and smarter forms of power generation.”