Blog Post

Ofgem under pressure to deliver NetZero target but new report highlights the challenges

Richard Simmonds • October 27, 2020

The energy regulator, Ofgem has come under pressure from a leading industry body who has called on it to ‘deliver, not delay, NetZero’ in its final price control determinations.

Ofgem Price controls row

An open letter signed by 17 businesses and organisation and led by Scottish Renewables calls on Ofgem to put the target of NetZero carbon emissions at the heart of its final price control determinations. 

The price control determinations have caused controversy in the energy sector with network companies angry over the plans to reduce the amount of money they can make on their investments.

Several major network companies such as National Grid and SSE have expressed their anger over the plans with some claiming that it could result in failing energy infrastructure and could result in blackouts.

Concerns over the viability of the NetZero target were also put forward by opponents of the price control plans as a way to add more pressure on Ofgem and force it to back down. 
SSEN said on the issue, “The proposals introduce delays and bind up network investment in red tape instead of enabling net zero. Instead of enabling NetZero, it will fail to meet 2030 targets.”


‘Not Delay NetZero’

“With Ofgem to publish its final determinations for electricity transmission and gas in December it is paramount the regulatory framework has the flexibility and agility to unlock the ambition and investment required to deliver, not delay, NetZero. The next five years will be crucial in our quest to tackle the climate emergency.


'With governments in Westminster and Edinburgh committing to world-leading climate change targets the renewable energy industry is calling on Ofgem to ensure investment in our networks is at least in step with, if not ahead of, this ambition,” Said Scottish Renewables chief executive Claire Mack.


Also read: Citizens Advice sides with Ofgem in network investment row

New report highlights NetZero challenges

Meanwhile, a new report released by the Society of Motor Manufacturers and Traders (SMMT) has suggested that a no-deal Brexit could cause the price of electric vehicles (EV) to soar.


Replacing diesel, hybrid, and petrol cars with EVs is a key part of the plans to hit the NetZero. Concerns over infrastructure and costs are already high.


According to the report, a no-deal Brexit could add an extra £2,800 to the price of Evs, something that will cut projected demand by as much as 20%.


Under a no-deal Brexit, tariffs under the World Trade Organisation (WTO) rules would be introduced adding £2,000 to the average cost of UK-built EVs exported to the EU.


 “Just as the automotive industry is accelerating the introduction of the latest electrified vehicles, it faces the double whammy of a coronavirus second wave and the possibility of leaving the EU without a deal. As these figures show, ‘no deal’ tariffs will put the brakes on the UK’s green recovery, hampering progress towards net zero and threatening the future of the UK industry,” said Mike Hawes, SMMT Chief Executive.

Further Reading

46% of all energy switches in September was from Large to Medium/small energy suppliers


Brexit -Deal or no deal, what will the implications be for the UK Energy Sector?


Is ‘Green Energy’ really good for the environment?


Dyball Associates are proud to help new supply businesses successfully launch in the UK market.

 

Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers get set up and start supplying.

 

For more information on how to start and manage an energy company, get in touch with Dyball Associates today.


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