UK energy regulator Ofgem has asked the National Energy System Operator to create a new code modification proposal to address the “uncertainty” associated with Transmission Network Use of System (TNUoS) charges.
In a letter to the network operator, previously known as National Grid ESO, Ofgem suggested a “temporary cap and floor intervention” should be designed and brought before the Connection and Use of System Code panel in October.
A proposal that establishes “appropriate, individual, upper and lower limits on the £/kW charges paid by generators” while retaining “regional differentials in charges between technology types through a single GB cap and floor” is preferred by the regulator.
This should also be capable of implementation by 2026 if approved, it said.
Industry has been calling for clarity over the future of grid charges that are projected to increase significantly over the next decade, particularly for generators in the northernmost parts of the UK.
Ofgem noted the higher costs, and the volatility with which they can currently be implemented, creates “challenges for critical investment” ahead of the UK’s 2030 decarbonisation target.
“We accept that long-term uncertainty around how charges will develop may increase costs for generators and create barriers to investment, ultimately risking the delivery of a clean power system by 2030 through Contracts for Difference or merchant investments and reinvestments. This, in turn, would likely lead to higher consumer costs in the long term,” it said.
“We are keen that the required pace and timing of generation investments to meet our 2030 goals is not compromised by the TNUoS regime, and that overall costs to consumers are kept as low as is possible.”