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UK regulator proposes help for distributed generation

26 March, 2002 – British electricity and gas regulator Ofgem today published proposals aimed at improving the position of distributed generation which have faced steep costs for grid connection. The government is seeking to encourage distributed generation, which is often in the form of wind and solar power, as part of the measures it needs to take to meet environmental targets.

The Ofgem proposals follow a period of consultation and take into account the views expressed in the 42 submissions received. It aims at implementing measures prior to the next distribution price contribution in April 2005.

Distributed generators, typically smaller combined heat and power (CHP) generators or renewable generators such as wind, solar or hydro power, currently find it difficult and expensive to connect and operate on the distribution networks which have not been built to accommodate them.

The proposals for immediate action include, allowing generators the option of spreading the cost of connecting to the distribution network, making it easier for domestic Combined Heat and Power (DCHP) customers, who have a heating system which can generate its own electricity, to connect to the networks by establishing a standard set of procedures and providing full and comprehensible information for prospective distributed generators.

Ofgem’s Managing Director, Customers and Supply, John Neilson said, “The development of distributed generation has an increasing part to play in meeting the Government’s long term environmental targets. That is why we are looking at the issues facing distributed generation to ensure that its development is not hindered by the way networks are currently operated and regulated.”

Ofgem said there were a number of issues that need to be discussed at the next distribution price control including, developing financial incentives in the price control of distribution companies, so there is a fair basis for connecting distributed generation to their systems, setting out more clearly what generators are charged for connecting to the system and what they pay to put electricity on to the network and how distributed generation should be taken account of within the distribution price control process.

Work is beginning this year on the distribution price control review to take effect from April 2005.