The government will fail to achieve its targets for CHP and renewables unless it takes action to counter the effect of NETA (New Electricity Trading Arrangements), according to Ofgem chief executive Callum McCarthy. In a report to energy minister Brian Wilson, Ofgem points out that since NETA started up power exports from small generators have fallen by 44 per cent while costs have increased by 16 per cent, and predicts that power exports will fall further as the effects of the new trading arrangements become fully felt. The picture is even worse for CHP where power exports have fallen by 60 per cent, equivalent to a loss in CO2 savings of 3 million tonnes.
Ofgem has also confirmed that its widely promoted ‘consolidation’ option, whereby small generators work with intermediaries to trade their output, shows no signs of being taken up.
Renewables and energy efficiency ginger groups such as the Combined Heat and Power Association and the Confederation of Renewable Energy Associations have commented that it is the government’s own commitments to renewables and CHP that they have failed to deliver on, and that Ofgem have failed to embed the necessary mechanisms in NETA despite their obligation to do so. It is also contrary to the government’s own projections, which envisage a large increase in the renewables’ role.