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SP Transmission has called on Ofgem to undertake a “thorough review” of the Environmental Discretionary Reward (EDR) to align it more clearly with its objectives.
SP Transmission said the mechanism has driven business changes that means it is more focused on improving its sustainability, but added the balance of the mechanism “does not appropriately reflect” its objective to encourage licensees to achieve high standards in environmental management.
It said in a submission to an Ofgem consultation that the EDR is more focussed on helping the industry move towards a low-carbon system, which it now considers to be “business as usual”.
SP Transmission also said that the scope of the incentive is too broad and overlaps with other incentives, and there is insufficient weighting on the Transmission Operator’s environmental performance and the carbon footprint of its own activities.
It said a higher weighting could “help drive a change through the whole supply chain and across the wider electricity network.”
“Despite the recent announcements in government energy policy, the aggregated effect of distributed generation connection on the transmission network is considerable and changes are needed to fully respond to this,” it added. “The EDR scheme could provide an effective incentive to drive this change.”
Scottish Hydro Electric Transmission (SHE Transmission) also agreed that the scheme is skewed too much towards promoting a low-carbon economy.
However, overall it and National Grid Electricity Transmission said the EDR scheme is “driving the right change”.
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