ESA criticizes Ofgem`s decision to reduce payments to small generators

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Source: Environmental Services Association (ESA)

London, UK — Ofgem, the independent energy regulator for Great Britain, has decided to reduce a specific payment that some small electricity generators receive for producing electricity at peak times. Ofgem’s view is that the level of the payment is distorting the wholesale and capacity markets and if no action is taken the distortion will increase. The Environmental Services Association (ESA), the voice for the UK’s resource and waste management industry, has raised concerns over the decision to reduce the payments by almost 95 per cent.

Ofgem has announced its decision to cut the payments from £45/kW to between £3/kW and £7/kW over three years. That will hit small-scale renewables, including waste-fuelled electricity generated by energy from waste, anaerobic digestion and landfill gas.

ESA’s Executive Director, Jacob Hayler stated: “Ofgem has ignored our concerns about the scale of the proposed cuts to small, decentralised, low-carbon generators. Not only does this decision endanger the UK’s renewable energy commitments, it also makes a mockery of our circular economy ambitions by disincentivising resource efficient use of waste as a fuel. The removal of these payments will raise costs of waste management for local authorities at a time when services are already under threat.“

Energy generated from waste – says Jacob Hayler – is a reliable source of low-carbon baseload electricity which contributes to the UK’s security of supply whilst keeping costs down for consumers. „Despite the Government’s pronouncements on the importance of diversifying the energy mix, Ofgem has favoured big fossil fuel power stations over smaller more sustainable generators which could now be forced out of the market.“ ESA has said in the past that network charging is highly complex. „These changes should not be made in isolation or they risk unintended consequences,” Hayler added.

Source: Environmental Services Association