According to Cornwall Energy, planned changes to the rules governing the energy markets could drive up costs for consumers and undermine the security of Britain’s energy supply.
In the report published by Cornwall Energy, they warn that proposals to cut the financial benefits for local electricity generators, those that are not connected to the national grid, could have unintended consequences including hampering the UK’s progress towards its energy goal.
So-called “embedded generators”, which include the majority of onshore wind and solar projects, currently benefit from revenues that recognise the positive effect that they have on reducing the costs of balancing electricity supply and demand. But both the government and the energy regulator, Ofgem, have claimed that these cost benefits might be too high, and they should be reduced.
Proposed rule changes that would eliminate one of the most significant benefits, which rewards local generators for helping to ease stress on the system during the winter, are now being prioritised.
Cornwall Energy’s report warns that the proposals would bring into doubt the economic viability of local power projects and that they are incompatible with the government’s desire to create a more flexible energy system that can facilitate the low-carbon transition. It says that “piecemeal” reforms not only risk distorting other key government policy programmes that aim to support renewable energy development and bolster supply security, they are also hitting investor confidence, which has already been weakened over the past 18 months by a number of unexpected policy changes.