Ofgem TCR could delay subsidy-free solar by five years, Aurora finds

Ofgem’s Targeted Charging Review (TCR) proposals could delay the onset of subsidy-free solar in the UK by as much as five years, new research by Aurora Energy Research has found.

The research firm’s latest report serves as yet another hefty rebuke of proposals that have proven highly controversial since their unveiling last year.

First unveiled in November 2018, Ofgem’s TCR proposals contain a mix of changes to the way network costs are recovered, including axing embedded benefits and the application of fixed residual charges, rather than a mix of per-unit consumption and peak demand charges.

At the time of their release many trade bodies warned that solar stood to be hardest hit, and investors in utility-scale solar farms have since warned of a not insignificant impact on revenues if the changes are pushed through as outlined in the proposals.

And in new research, Aurora has found that the combined effect of the proposals would damage the economics of renewables connected to the distribution network – as most solar farms are – to such an effect that the deployment of subsidy-free projects could be pushed back by between two and five years.

In addition, the research also claims that solar PV capacity could be some 5GW lower by 2035 as would have otherwise been the case.

Just last month, new research compiled by economic consultancy Oxera on behalf of energy firms ScottishPower, innogy, Vattenfall and RES found that the TCR proposals stood to undermine investment in renewables and actually stand to increase carbon emissions.

Weijie Mak, project leader at Aurora and co-author of the report, said the proposals could have a “very significant impact” on the country’s power market.

“We understand the need for Ofgem to ensure network efficiency and consumer protection, however there is a risk that pursuing too narrow a focus on these objectives could undermine the transition towards cleaner and smarter forms of power generation, as well as undermining investor confidence,” he said.

Ofgem’s consultation on the proposals closed in February this year and the regulator is due to respond publicly by the summer.