Experts claim that non-energy costs are due to increase by almost 20% in 2018-19.
Experts at EDF predict that non-energy costs are expected to rise by almost 20% in 2018-19, with Contracts for Difference, Renewable Obligation and Capacity Market supplier charges showing the most significant changes.
EDF analysts expect Feed-in Tariff (FiT) costs to increase over 2018-19 as installed capacity grows. Utilisation caps could also impact these costs, while Energy Intensive Industry (EII) exemptions are expected to come into effect in April 2019; with these costs passed on to non-exempt consumers – read more here.
Like FiT, as more renewable generation capacity was added to the grid, we can expect to see a rise in Renewable Obligation costs. However, no new capacity has entered the market under the RO scheme since the start of 2017 as it is set to be abolished in 2019, meaning any increases will be implemented at a slower rate than when the scheme was in full flow.
The rise in new generators which have entered the market under the Contracts for Difference (CfD) mechanism will also lead to an increase in corresponding costs. CfD costs will be dependent on price movements on the energy market, as well as generator start dates; to keep up to date with any market changes, look out for our daily analysis.
Transmission Network Use of System (TNUoS) for 2018-19 will also increase slightly across all zones, although changes to 2019-20 Distribution Use of System (DUoS) costs are minimal. However, it is worth noting that these charges can vary by region and tariff.
Balancing costs could be one of the few charges to decrease over the next year thanks to the HVDC link - an undersea cable between England and Scotland which provides another option to transport electricity to quickly balance the system.
Meanwhile, Ofgem have launched a Targeted Charging Review (TCR) which will look at various options for transmission and distribution network charging. The regulator is expected to conduct a consultation this summer, with any changes set to be implemented in April 2020.
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