Ofgem chairman John Mogg says companies running Britain's networks are facing a period of significant change with the government's drive for increased amounts of renewables. "We have been developing a regulatory framework that will give real incentives to the distribution companies to invest efficiently and quickly to secure maximum value and benefit for customers from the growth of distributed generation," he says.
To encourage distribution network operators (DNOs) to connect small generators, Ofgem proposes allowing them to pass on 80% of their costs to consumers until they recover the investment from generators. It suggests an incentive of £1.50 a kilowatt connected a year with a higher incentive rate for Scottish Hydro-Electric of £2/kW a year to reflect the higher than average costs for network connection in the remoter areas of Scotland.
The price controls also deal with the need for distribution companies to put more effort into research and development (R&D) and innovation. "Experience over the past years has shown that companies have invested very little in research and development," says Mogg. "This needs to change in response to the increasing pace of renewable development. Technical innovation should form part of the network companies' response to the greener energy challenges ahead."
DNOs will receive incentives from a dedicated fund to invest more in R&D and to create innovative ways of connecting distributed generation in "registered power zones projects." The Innovation Funding Initiative and the power zones will make the system more efficient and help remove the barriers and constraints faced by renewable generators wishing to connect to the network, says Mogg.
Meantime, a report by a cross-industry group set up to identify obstacles to renewables claims that some 50% of the barriers to small scale distributed generators have been removed. In its second annual report, the Distributed Generation Co-ordination Group says that some barriers still remain, but since the group was set up, at least half of the 24 barriers it identified have been brought down.
Achievements include a standard approach by distribution companies where more than one generator wants to connect to the same section of transmission network, standard technical guidance on the connection of distributed generation, and a new methodology for recognising the contribution of distributed generation to network security.