Ofgem plans cuts to small generators’ Triad payments

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Ofgem is set to implement deep cuts to the revenues earned by small power generators. The regulator plans to reduce the Triad benefit, currently £45/kW, to £2/kW over three years, starting in 2018. While Ofgem suggests the Triad component of so-called embedded benefits is spiralling out of control, over-rewarding small generators and distorting the outcome of the capacity market, small generators are aghast at the proposal.

“The consequences for industrial manufacturers, hospitals, and local authorities who generate their own power could be devastating,” said Tim Rotheray, head of the Association for Decentralised Energy (ADE). 

Rotheray suggested that Ofgem was wrong to “depend on a rushed industry review, led by large coal and gas generation interests” and had ignored independent analysis by Cornwall Energy about the level of benefits accrued by small generators. He repeated calls for the regulator to take a full review of network charging. Until that review was undertaken, Rotheray urged Ofgem to make softer cuts to the payments.

 

If the regulator proceeds with its plans, generators under 100MW will see their Triad benefit reduced by around a third each year for three years from 2018. However, Ofgem could face legal challenges from smaller generators, according to specialist energy developer and generator site, New Power.

See Ofgem’s consultation here.

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