UK energy regulator warned not to damage small generators

The former UK energy secretary has repeated his call for the country’s energy regulator to take care when reviewing the contribution of small embedded generators in the energy system.

Sir Ed Davey has told the Daily Telegraph that while Ofgem is right to curb the extent of small scale diesel generators as part of the evaluation, other cleaner fuel generators are in danger of being included in sweeping reforms that would ultimately prove damaging from an environmental and energy security perspective.
Sir Ed Davey
"This rushed change will hit exactly the flexible plant such a biomass, CHP [combined heat and power] and energy-from-waste that the Government says they want. And its impact could be much larger than they currently admit, resulting in Britain sleepwalking into brownouts and blackouts."

It would be "using a sledgehammer to crack a nut”, he said.

Under the current network charging system, small generators enjoy certain benefits that are not enjoyed by bigger power plants – both by tapping extra revenues, and avoiding costs.

This has led to a boom in small power plants, including diesel generators, which have been able to undercut big new gas plants to secure subsidies through the Government’s “capacity market” scheme to help keep the lights on.

The Government, which wants big new gas plants, has said the small generators may be enjoying an “unfair advantage” and backed an Ofgem review.

A new report from consultants Cornwall Energy cited by Davey warns against “the early closure of a potentially significant amount of distribution-connected generators”.

Under the current network charging system, the amount industrial energy users pay is determined by how much power they draw from the grid at peak times. Many avoid the charges by paying for small power plants to fire up and effectively cancel out their usage.

Nigel Cornwall, chairman of Cornwall Energy, said many small plants currently depended on these payments, which accounted for up to half of their revenues.

He said Ofgem’s changes could adversely affecting the economics of up to 8 GW of existing small plants and 2GW of new small plants due to be built in coming years.

UK spare energy capacity this winter is forecast to be 3.4 GW including emergency schemes.

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