Ofgem takes minded-to position on Triad Avoidance (good news for the consumer…?)

Ofgem has today published an impact assessment and minded-to position on CMP264/265 – triad avoidance payments.

After years of promising to do something about embedded benefits, it seems that Ofgem are now going to act.

Ofgem’s current position:

  • Approve ‘WACM 4’.
  • Triad avoidance payments will now simply reflect the value that these generators bring to the network, which has been calculated at about £2/kW (rather than the existing tariffs of circa £45/kW) in additional to any locational signal.
  • Also, there will be no grandfathering for existing sites, with Ofgem indicating that they “do not consider a lack of grandfathering would result in unfairness to smaller EG since prudent investors know that charging arrangements are subject to change.”
  • Phased introduction between 2018-2020
  • This represents a significant impact to all embedded generation – especially dispatchable embedded generators, in particular those that have secured capacity market contracts.
    Impact assessment consultation open until 10 April 2017.

Clearly, the issue of investor confidence didn’t hold enough weight to stop Ofgem’s drive for cost reflectivity.

I’m sure there will be plenty of analysis and insight to be drawn from the publication. We will certainly be spending some time having a careful look.

For expert advice on grid charging and revenue, get in touch with us.