Ofgem proposals could set British solar back by up to five years, study warns

New rules proposed by Ofgem could hold back the deployment of British solar power by up to five years, a top energy consultancy has warned.

Aurora Energy said today that the plans could hit the roll-out of so-called distribution-connected renewables, which include all of Britain’s solar and half of onshore wind power, by five and one gigawatts respectively by 2035.

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It said the plans would hurt the energy sources by, among other things, introducing new balancing charges and lower wholesale prices.

Ofgem has taken submissions on the proposals and is expected to make a decision this year. Distribution-connected renewables account for around 40 per cent of Britain's total capacity, according to Aurora.

The report contrasts with Ofgem’s own assessment, which said that subsidies would kick in to offset these issues. “In reality onshore wind and solar photovoltaics are not eligible to receive these subsidies,” the report said.

It also warned that Ofgem's targeted charging review (TCR), which aims to create a level playing field between different types of generation, would benefit large-scale gas power stations at the expense of other solutions.

Although the government and Ofgem have a plan to help firms deploying battery storage, and those who use smart solutions to push demand away from peak times, the TCR itself undermines the economics of the technologies, Aurora said.

“These changes would have a significant impact on the returns for power utilities across a wide spectrum of asset classes,” said the report’s co-author Weijie Mak.

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He added: “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, as well as undermining investor confidence.”

In a statement, an Ofgem spokesperson said: “We are considering all responses to the TCR consultation, including the Aurora report, before making a final decision on TCR later this year.”