A new ‘Tesla tax’?

Marc Smeed reflects on the shifting sands of network charging and access.

This week marked another exciting chapter in the book of grid charging.  We are, yet again, looking at fundamental changes to access and charging arrangements through the Changing Futures project.  Unlike the previous ‘fundamental reviews’ (TAR and Project TransiT), this one is not limited to transmission charging for generators, this discussion about ‘whole system’ issues – for everybody who buys and sells electricity across GB.

On Monday, Ofgem released a couple of papers (here and here) outlining some views on how the network charging and access regime might work in the future.  This was followed by the inaugural Charging Futures Forum on Thursday – a pan-industry event hosted by National Grid and Ofgem.  This new forum is the consolidation of a number of disparate industry workstreams which have been looking at charging arrangements in various forms and for various reasons over recent times.

Thursday’s forum was a great opportunity to talk about the big issues with well-informed industry anoraks (like me!). Amongst a wide range of topics, there are two really big ticket items that have been thrown open for discussion – network access rights and use of system charges for consumers.

Network access rights may seem like a pretty boring topic (to most normal people it is), but for anyone who wants to buy or sell electricity from the GB electricity market it is a pretty critical consideration.  What right does your project/business/home have to use the network? (likely none)  Where are your rights written down? (not really anywhere)  How long do you have these rights? (well, never…).

Most of the energy industry is bobbing along assuming that once they have signed their connection agreement (or bilateral contract), they can have their grid connection for as long as they want. But, we might need to have a collective double-take on that. In order to use our networks more efficiently, Ofgem thinks we need to have a long, hard look at how access rights are divvied up. Asking the questions – who gets what access? and for how long? and how good is the quality of that access? This then has a knock on for charging – how much should folks have to pay? (and/or be liable for?) for the different types of network access?  Pretty significant for those with existing energy projects and new (especially given that Ofgem really, really doesn’t like grandfathering pre-existing arrangements when code changes are made).

Second point that I want to draw out is the discussion regarding network charging for end consumers.  Across GB, we have an issue right now – more micro generation (and other behind the meter generation) is displacing network costs from some users and shifting it onto others.  We aren’t alone in facing this problem, many other parts of the world are grappling with the same issues.  However, one of the likely solutions to this problem will be that end consumers will be charged a premium if they want more network access (for example to plug in a fast EV charger).  Interesting concept, and probably fair.  But I can just see the tabloid headline now… “New Tesla Tax“!

Notwithstanding the potential for a new political football, these are all very serious and valid issues that need to be resolved to help us to figure out how we are going to facilitate electrification of heat and transport without needing to rebuild our electrical infrastructure.

Get in touch with us if you want to try and understand more about what these changes could mean for your business.