Changes to charging: How Ofgem is preparing for a very different grid
Blog
- Patrick Cassels
- Head of Distribution Charging Reform, Energy Systems Management and Security
- Publication date
- Industry sector
- Distribution Network
Record global gas prices pushing up customers’ energy bills and the war in Ukraine reinforce the need to achieve Britain’s climate goals.
The best way of protecting customers from volatile and expensive gas prices and boosting the country’s energy security is by generating more clean homegrown energy.
Doing this will require a massive increase in clean electricity generation to power electric cars and clean alternatives to gas boilers like heat pumps, reducing our dependence on imported oil. This will require an energy grid which looks very different to today’s.
Rewiring the grid
In Britain electricity is moved around by a system, colloquially known as the national grid, which has its origins in the 1920s and 1930s, a time when coal was king, and the internal combustion engine was firmly establishing its dominance on the nation’s developing road network.
A century later, things are very different.
To deliver the UK’s target of decarbonising the economy by 2050, Britain will have to undergo a rewiring of its energy systems on a scale unseen in almost a century.
The grid will need to be reinforced and extended to prepare for the shift to low carbon technologies, as electricity demand increases as millions of new electric vehicle (EV) charging points and heat pumps come online. There will also need to be new grid connections for more clean forms of generation such as wind and solar farms and batteries which enable power to be stored for when it is needed.
More cables will need to be built to transport the additional electricity needed from new sources of generation to where it is needed.
The infrastructure required will cost billions of pounds and needs to be paid for in a fair manner which is affordable to consumers today and in the future.
Revising regulations
As with the infrastructure it will help pay for, many of the regulations governing how energy infrastructure is paid for, date from very different times. We are revising and updating these charging regulations to ensure they continue to be fit for purpose, share costs fairly among all users of the grid and enable the physical rewiring of the grid needed for the energy transition.
The Access and Forward-Looking Charges Significant Code Review (Access SCR) decision that we are publishing today is part of this process.
Currently Distribution Network Operators (DNOs) - the companies who own and operate the infrastructure which transports electricity via cables to users locally, - charge those requiring a new or upgraded connection to the network directly for upgrades to the grid that are needed to accommodate them. However, the current charging system has a number of drawbacks.
For example, a factory may want to change a major operating process from gas-powered to electric. In the current rules, they may be put off by the high upfront costs of upgrading their connection to the grid.
Also, the sheer scale of new connections that will be needed, for example to charge up millions of electric cars, as diesel and petrol fuelled vehicles are phased out, requires a more strategic, efficient, and joined-up way of planning and paying for new connections to ensure costs are kept down for all customers.
Fit for net zero
The changes we are announcing today will mean more of the costs of these new connections will be shared in a fair and proportionate way amongst all network users, making the likes of electric vehicle charging points and heat pumps, more accessible and affordable for individual customers.
The charging reforms will come into effect from April 2023.
Along with our other recent and upcoming charging reforms, these changes will help build an energy system fit for net zero that provides clean, more affordable, and homegrown energy to all customers.
To read our full report visit Access SCR (Significant Code Review).