Some of these, such as the Renewable Obligation, are government subsidies to help support the growth of renewable energy generation. However, network charges also make up a percentage of non-energy costs.
Network charges allow the network owners and operators the opportunity to recover some of the costs associated with the operation and maintenance of the infrastructure that helps to power homes and businesses across the country.
As part of its ongoing work to create a fairer energy network, the industry regulator Ofgem launched the Targeted Charging Review (TCR) in 2017. The purpose of the TCR is to reduce distortion across the network by ensuring that network charges are cost-reflective and paid by the relevant parties, as the current charging structures incentivise avoidance for some network users, thereby creating unfair cost burdens on others.
The TCR is a wide-ranging programme, looking as far forward as 2022, and has so far helped to bring equitability to the network, ensuring that the burden of non-energy costs are more fairly distributed. Despite COVID-19, these changes are still expected to come into place over the next 12 to 24 months, and businesses should be preparing for potentially revised non-energy charges.