Post on 30-Mar-2018
2011. UK Power Networks. All rights reserved
• Introduction to Flexible Plug and Play
• Trial location
• Case studies
• Overall project plan
• Commercial arrangements workstream
• Concepts to keep in mind throughout the day
2
Contents
2011. UK Power Networks. All rights reserved
Objective: Cheaper and faster connection of DG to constrained parts of the network by
trialing smart grid technologies and smart commercial agreements
Duration: 3 years: January 2012 - December 2014
Project Value: £9.7 million (6.7m funding from LCNF Tier 2)
Partners:
Flexible Plug and Play
2011. UK Power Networks. All rights reserved
Connected Wind Farms
Consented Wind Farms
Received Applications Wind Farms
Scoping Sites Wind Farms
Grid Substation
Primary Substation
33 kV 132 kV 400 kV
Location: Cambridgeshire
Surface: ~ 700km²
Network: 33kV and 11kV Network (2 Grid, 10 Primary substation sites)
Connected Wind Generation: 120MW
Planning & Delivery Stage: approx 270MW
Flexible Plug and Play:
Trial location
2011. UK Power Networks. All rights reserved Classification: Restricted 5
The challenge – March Grid (case study)
In the context of the heat map
Constraints
(focus on 33 and 11kV)
• Reverse power flow
limitations
• Thermal line limits
2011. UK Power Networks. All rights reserved Classification: Restricted 6
The challenge – March Grid (case study)
Constraints
• Reverse power flow limitation (N-
1) due to protection – set at a max
of 75% rating of the transformer
• Constraint occurs at min Load
max Gen situations
Consequences
• Substation considered full
• Very expensive quotes for
connections to projects in the
vicinity (Distance or increased
voltage level)
G L Generator Load Circuit
breaker
Case Study 1: March Grid
The challenge
2011. UK Power Networks. All rights reserved
• Reverse power flow limitation (N-1)
due to legacy protection – currently set
at 75% rating of the transformer
• Solutions:
Novel protection scheme
Active Network Management
IP Communications
Suitable commercial &
contractual framework
7
G
Interruptible generation
Interruptible generation
MEASURE
CONTROL
CONTROL
G
Case Study 1: March Grid
The solutions
2011. UK Power Networks. All rights reserved
Local Substation thermal constraint
Proposed New Generation Project
ANM
WAN / RF Mesh
Proposed New
Generation Project
New 33kV
underground cable
Closest point of
connection
Case Study 2: Single Wind Farm Dynamic Line Rating
DLR
Business as Usual:
• Higher costs
• Longer lead times
Local Substation thermal constraint
Smart Solution: Smart Device – Dynamic Line Rating (DLR)
Active Network Management (ANM) System
Smart Commercial Arrangements
2011. UK Power Networks. All rights reserved 9
Sep
2012
Dec
2012
Mar
2013
Jun
2013 Dec 2014
SDRC 9.1
Stakeholder
Engagement
report
SDRC 9.3
IP Comms
Platform - LIVE SDRC 9.8
Deploy Quad
Booster
Sep
2013
SDRC 9.4
Demonstrate FPP
Characteristics (ANM live)
Completion of core
infrastructure deployment
SDRC 9.6
Offer of FPP
connection to real
customers
SDRC 9.7
Demonstration of
active power flow
and voltage
management
SDRC 9.5
Delivery of Strategic
Investment
Model
Trial Participant Engagement
SDRC 9.2
Development of
smart commercial
arrangements
FPP Connection
offers First issue
to customers
Timetable Successful Delivery Reward Criteria - SDRC
2011. UK Power Networks. All rights reserved
Customer engagement
Seven projects seeking connection in the trial area were identified and six of them
(26.2MW) have received FPP offers on1 March 2013
The FPP “Opt-in” offer introduced a standstill period and a commitment to UK Power
Networks to provide an alternative by 01/03
Customers received a “Briefing Document” which is an FPP information pack
Applications were consolidated in the FPP area to ensure all customers are treated
equally
1 March 2013
Enquiry and
application
Accept s16
Offer & opt
into FPP
FPP
investigation
period
S16 offer with
FPP Opt in
option
Receive s16
variation
including FPP
alternative
Accept FPP
variation
Proceed with
s16 Offer
Walk away 1st
stage
payme
nt
2011. UK Power Networks. All rights reserved
Systems integration
Smart applications
Knowledge Dissemination
Commercial arrangements
Strategic Investment Model
Smart devices
Telecommunications
Platform
Stakeholder Engagement 1 5
2 6
3 7
4 8
Project Overview
2011. UK Power Networks. All rights reserved
Commercial Arrangements
University of Cambridge Report:
Four case studies to understand how these issues are addressed elsewhere
Principles of Access Report:
In collaboration with Baringa Partners and Smarter Grid Solutions
Understand commercial alternatives for immediate implementation
Connection Agreement Template
Incorporate interruptibility to existing template
Case Study Principles of Access Pay compensation
Orkney, SSE LIFO NO
Connect and Manage Market Based approach YES
Ireland Pro-Rata YES
California Pro-Rata YES
2011. UK Power Networks. All rights reserved
Concepts to keep in mind
• Constraints
• Curtailment
• Interruptible connections
• Active Network Management
• Distributed Generation
Flexible Plug and Play Smart Commercial Arrangements
Adriana Laguna-Estopier - Low Carbon Project Manager
2011. UK Power Networks. All rights reserved
Contents
• Customer Recruitment
• Understanding Curtailment
• Principles of Access
• Commercial Packages
• Capacity Quota
• Commercial Framework for Flexible Plug and Play
• Challenges and Next Steps
2011. UK Power Networks. All rights reserved 16
Customers seeking connection in the trial area
Be proactive through stakeholder engagement
Recruiting within the existing connections process
Demonstrating a clear business case and benefits to customers
Customer recruitment
Wind Farm 33 kV 11 kV BAU offer Point of Connection
A 0.5 £1.9 m 11kV feeder - 10.5km
B 2.5 £1.9 m 11kV feeder - 12.75km
C 1 £2.0 m 11kV feeder - 9.5km
D 7.2 £3.5 m 33kV feeder - 13.5km
E 10 £4.8 m 132/33kV site
F 5 £1.2 m 132/33kV site
2011. UK Power Networks. All rights reserved 17
Understanding Curtailment
Network topology can
change through time, both
for maintenance and network
efficiency
Local demand can off set
generation output that exceeds
the capacity limit of the constraint
The level of the thermal
constraints can vary with
temperature / weather
Level of generation behind a
constraint relative to the capacity
of the constraint is a key driver of
curtailment
When we have multiple generators, how do we decide when to curtail each
one and how much do we curtail them?
2011. UK Power Networks. All rights reserved
• Mechanism for allocating curtailment between generators.
LAST IN FIRST OUT PRO – RATA
G1 G2 G3
Curtail
generators
in order of
date of
connection
Constraint
G1 G2 G3
Curtail generators
equally
Constraint
Connected 1st
18
2nd 3rd Connected 1st 2nd 3rd
Principles of Access
2011. UK Power Networks. All rights reserved
19
More efficient
Pro -Rata
Network
Efficiency
Certainty
Fairness
Simplicity
Learning
Criteria of Assessment: What are we optimising? Criteria for Assessment
Could lead into capacity
underutilisation
Key Criteria Last In First Out
Open-ended in terms of defining
the worst case scenario
Insulates from impact of future
connectees
Assigns curtailment equally Assigns as first come first serve
Requires a new framework Simple implementation
Has not been implemented in UK Extensive experience
2011. UK Power Networks. All rights reserved
Commercial Packages
• Time Vintaging
• Capacity Auction
• Capacity Quota:
– Based on defining a specific level of curtailment
– Based on comparing the cost of curtailment to the cost
of reinforcement
2011. UK Power Networks. All rights reserved
Capacity Quota
• Curtailment levels (MWh/yr) will increase as more capacity connects, increasing
generators’ lost revenues
• We plan to set the quota at the level where the cost of curtailment is equal or
exceeds the cost of reinforcement
2011. UK Power Networks. All rights reserved
Framework for a Capacity Quota Rules to connect under FPP
1. Grandfathering existing customers: Generators that are already connected will not be subject
to the ANM
2. FPP customers connect to ANM: All future generation that connects within the constrained area
will be subject to an interruptible connection through Active Network Management
3. Principles of Access: Pro–rata curtailment to ANM generators
4. Capacity Quota: UK Power Networks will limit the total capacity of generation connected within
the constrained area to a pre-agreed cap
5. Managing the Quota: We will inform ANM Generators when the Capacity Quota has been filled
6. LIFO after Quota: UK Power Networks will apply a Last In First Out principles of access once the
Capacity Quota has been reached
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2011. UK Power Networks. All rights reserved
Connection agreement template
First connection arrangement to include the following concepts:
Curtailment: the action of limiting generation output
Constraint: defines the specific location in the network that will have to be
subject to curtailment
Maximum Interruptible Capacity: declares MW connected under
interruptible conditions by Active Network Management
Capacity Limit: MW of installed capacity that will connect and get curtailed
as a quota
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2011. UK Power Networks. All rights reserved
Reinforcement Triggers
G
G G L
G G G
Reinforce transformer
G
G G
G
Reinforce transformer
L
2. Generation triggered 1. Demand (load) triggered
2011. UK Power Networks. All rights reserved
Challenges and Next Steps
Challenges
Evaluate the possible alternatives while developing a solution for immediate trial
implementation with real customers
Address internal and external stakeholders’ concerns
Next Steps
Understand optimal cost allocation
Further sensitivity analysis
Continue customer engagement, understand client’s perception of our methodology
and findings
Signup customers and deliver connections under the FPP framework
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2011. UK Power Networks. All rights reserved
Boardinghouse Wind Farm
UK Power Networks – Flexible Plug & Play
18 March 2013
www.ecogen.co.uk
2011. UK Power Networks. All rights reserved
About EcoGen
• Established renewable energy specialist
• Over 20 years experience in the design, build and operation of projects
• Capital financing expertise
• Significant practical experience of grid issues
2011. UK Power Networks. All rights reserved
About EcoGen
Development and Consenting
Commercialisation and Contract Procurement
Financial Structuring
Construction Management
Operational Management
Lifecycle Planning
EcoGen’s offering covers the entire range of services required to successfully manage a renewable
energy project
from initial site feasibility assessment to end of its operational life
2011. UK Power Networks. All rights reserved
About Boardinghouse Wind Farm
• 5 turbine project – 5km south west of March
• Submitted for planning in September 2009
• Consented on appeal in July 2011
• Subject to MoD Radar constraint – removed in August 2012
• Unable to accept a grid offer whilst significant project uncertainty existed
• Applied to UKPN in September 2012
• BAU offer accepted late 2012
2011. UK Power Networks. All rights reserved
Challenges Ahead
• Understanding the implications of the FPP offer Construction
Operational
Financial
• Undertaking suitable due diligence on the constraint modelling Identifying and appointing suitable consultants
Translating the constraint effect in to the energy yield forecast
Deciding on a suitable range of sensitivities
Presenting it to financiers
• Assessing the connection agreement documentation
• Within the next 90 days
2011. UK Power Networks. All rights reserved
Challenges Ahead
• Managing all of this through the contractual, technical and financial due diligence process
• Identifying a funding structure which does not unduly discount the value of the project as the result of perceived uncertainty
• Staying clear of Government intervention in the Renewables Obligation
2011. UK Power Networks. All rights reserved
Contact Details
• Steve Read +44 (0)1354 699026
+44 (0)7876 252 154
steve@ecogen.co.uk
• Tim Kirby +44 (0)8453 457731
+44 (0)7774 606646
tim@ecogen.co.uk
• Main Office Ecogen Limited
PO Box 49
Chacewater
Truro
TR4 8WZ
• www.ecogen.co.uk
2011. UK Power Networks. All rights reserved
Flexible Plug and Play
Understanding best practice regarding interruptible
connections for wind generation: lessons from national and
international experience
Michael G. Pollitt, Karim L. Anaya
EPRG-University of Cambridge 18 March 2013
33
2011. UK Power Networks. All rights reserved
Contents
• This Report
• About Curtailment
• Selection of Case Studies
• Case Studies
• Conclusions
• Next Steps
34
2011. UK Power Networks. All rights reserved
This report
• The Electricity Policy Research Group (EPRG) from
University of Cambridge is the project partner responsible
for exploring and analysing different case studies of
commercial arrangements that involve the allocation of
curtailment (‘Principle’ of Access) in response to network
constraints.
• The report is part of the SDRC 9.2 (submitted by UK Power
Networks in December 2012).
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2011. UK Power Networks. All rights reserved
About Curtailment
• Definition:
− Any limitation that prevents the generator to export its maximum capacity to the distribution or transmission network.
• Allocation rules (most popular):
− LIFO: Generators are given a specific order for being curtailed (based on a selected parameter such as the connection date).
− Pro Rata: Curtailment is equally allocated between all generators that contribute to the constraint.
− Market-Based: Generators compete to be curtailed by offering a price based on market mechanisms.
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2011. UK Power Networks. All rights reserved
About Curtailment
37
Figure 1: Example of Risk Allocation
2011. UK Power Networks. All rights reserved
About Curtailment • Social optimality:
− LIFO: reflects the social optimum (each generator is exposed to their marginal connection/curtailment cost, MCC) to the system) . MCC should be = Marginal Benefit (MB).
− Pro Rata: does not reflect the social optimum (generator faces the average connection/curtailment costs, ACC). ACC=MB. Social loss = shaded area (figure 2).
− Shaded area: those incremental system costs above the system benefit (produced by each additional MW of wind generation beyond the point where MCC=MB).
− It has been assumed that the MB to the system of each additional unit capacity is constant (same subsidy and technology).
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2011. UK Power Networks. All rights reserved
About Curtailment
39
Where M C C : M arginal connection cost, A C C : Average connectio cost, M B : M arginal benefits,
Q M F C : M ax firm connection, Q* M L : M ax LIFO, Q M P R : M ax Pro Rata. Own elaboration.
Cost
s (£)
MW connectedQMFC Q*ML QMPR
MCC
ACC
MB
Social loss under Max Pro Rata
Figure 2: Optimal connection (MW) with fixed constraint (ignoring risk)
2011. UK Power Networks. All rights reserved
Selection of Case Studies
• Selection criteria: (1) level of maturity of regulatory framework for
renewable energy (wind) and (2) selection of experiences with some
relevance to UK Power Networks (smart solutions, curtailment
practices).
40
Country Case Study Type of initiative
Installed capacity
(MW)
Share on electricity
generation (%)
United Kingdom Orkney ANM Project
7,952 4.4% Connect and Manage System Operator Regime
Ireland and Northern
Ireland 1,998
11.4% (Ireland),
7.2% (Northern Ireland)
Wind curtailment in
tie-break situations System Operator Regime
United States 2/4,570 4.1%
Renewable Auction
Mechanism Programme1/ For further details see Sections: 4.1.1 (United Kindgdom), 4.2.1 (Ireland and Northern Ireland), 4.3.1 (United States)
2/ Regarding California
Source: American Wind Energy Association (Wind energy facts: California), DECC (2012c), EirGrid and SONI (2011b).
Wind Figures 1/
Table 1: List of Case Studies
2011. UK Power Networks. All rights reserved
Case Studies – Orkney ANM Project, GB
• Implemented by SSEPD.
• New connections: only under non-firm generation (NNFG) and subject to ANM
and constraint policy.
• Principle of access: LIFO (date of connection offer).
• Maximum level of economic curtailment: 25 MW.
• Capacity connected around 15 MW (>9 generators).
• Capacity contracted > 20 MW.
• Curtailment risk: transferred to generators (no compensation).
• Investment risk: generators pay for network upgrades.
• Smart solutions: ANM saved around £30m in reinforcement costs.
• Commercial innovation: Curtailment: “commercially acceptable”.
• Strong stakeholder involvement.
• Issues: High fixed (ANM) costs for small generators, no possibility to curtail them
if under 50 KW.
41
2011. UK Power Networks. All rights reserved
Case Studies – Connect and Manage, GB
• Implemented by National Grid, replaced Invest and Connect (IC) and Interim Connect and Manage (ICM). The aim is to accelerate the number of generators connected.
• New connections: firm access (full access).
• Principle of Access: market-based. High price payments to wind generators under local constraints/low competition.
• Type of generators: renewable and non-renewables, including large and small embedded generation.
• Types of reinforcement works: (1) enabling works, (2) wider works. Enabling works allow early connections. The two-stage approach contribute to mitigating stranding risk for consumers. 805 MW connected by 31 December 2012.
• Curtailment risk: socialisation of all constraint costs (BSUoS).
• Investment risk: transferred to SO users (TNUoS).
• Issues: increase on network congestion, payments to generators (wind generators) do not reflect subsidies, difficult to apply to DNOs.
42
2011. UK Power Networks. All rights reserved
Case Studies – Wind curtailment in tie break
situations, Ireland • Proposed by the Single Electricity Market Committee (SEMC) from Ireland and
Northern Ireland (Oct. 2012).
• Type of generators: only wind generators in tie break situations.
• Type of firmness: firm, non-firm and partially firm generation.
• New Proposal: Pro-Rata with defined curtailment limits:
− The idea of indefinite compensation is not supported anymore after 2020.
− Curtailment limit based on a renewable penetration threshold.
− Gradual reduction of compensation for curtailment reasons.
− Impact: € 13million saving achievable in 2020, assumption 4% curtailment (638 GWh), with a curtailment value of around €20/MWh.
• Curtailment risk: transferred to customers (dispatch balancing costs, -DBC- gradual reduction), after 2020 risk transferred to generators (no compensation at all).
• Investment risk: transferred to SO users (TUoS).
• Issue: protect consumers from full compensation (DBC) and at the same time promote connection of more wind generation.
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2011. UK Power Networks. All rights reserved
Case Studies – Wind curtailment in tie break
situations, Ireland, Final Decision (March 2013)
• Pro rata with removal of DBC for curtailment by 1 January 2018:
− Pro rata applicable to all wind farms (firm, non-firm).
− No compensation for curtailment (firm, non-firm) by 1 January 2018.
− No sliding scale mechanism: costly and complex to develop.
− 2018 strikes an appropriate balance (between
developers/consumers).
− Encourage only viable wind farms projects to proceed and contribute
to meeting renewable targets by 2020 (strong entry signal: short run
dispatch efficiency and long run market efficiency).
− Distinction between curtailment and constraint remains (direct impact
on market payments).
− Required changes to market rules and systems by TSOs and SEMO.
44
2011. UK Power Networks. All rights reserved
Case Studies – Renewable Auction
Mechanism (RAM) by SCE, California • Adopted by California Public Utility Commission (CPUC) in 2010.
• Implemented by 3 Investor-Owned Utilities (IOUs) in California:
• The RAM Programme:
− Procuring method: market-based, 2 auctions per year (1,299 MW in 2 years across IOUs). Length of contract:10/15/20years.
− Size: small generators (up to 20 MW per project).
− Bidding: project price + upgrade costs (transmission)
− Results: RAM 1 (IOUs: 140 MW allocated), average price (single value): US$ 89.23 / MWh. SCE: RAM 1 (67MW), RAM 2 (87MW)
− Use of independent evaluator.
− Availability of connection maps (Google Earth).
• Curtailment risk: transferred to generators (curtailed energy < 50 hours/year – cap) under specific conditions (negative price, …).
• Investment risk: transferred to generators (distribution upgrades), and to SO users (transmission upgrades).
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2011. UK Power Networks. All rights reserved
Conclusions
• Principle of Access: LIFO, Pro Rata and market-based
represent different alternatives of how the DNOs could
address the need for connection of more wind to the existing
distribution system.
− LIFO: makes economically efficient use of the available
capacity in the short run, but transfers increasing risk to
the last in generator connected. May compromise
dynamic efficiency by making it more difficult to get
agreement to increase network capacity when this
becomes socially valuable.
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2011. UK Power Networks. All rights reserved
Conclusions
– Pro Rata: reduces risk to the marginal generator, but at the cost of potentially connecting too much generation behind a constraint. But, it is crucial and difficult to set the right capacity limit, it needs to consider both short run and dynamic efficiency.
– Market-Based: allows generators to optimally turn down their wind farms according to the costs of doing so, dual advantages: encourages generator investment in flexibility and creates the opportunity to have system operator incentives to reduce curtailment. But, problems in deciding who pays generators for curtailment (usually customers), others: lack of competition and high transaction costs (small generators), administrative burden (setting up the bid).
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2011. UK Power Networks. All rights reserved
Conclusions
• Allocation of risks among the parties:
– Curtailment risk:
System operators usually transfer the risk of transmission
connected generation being curtailed to final customers (i.e.
through DBC-Ireland/NI, BSUoS-UK). However for
distribution connected generation, the rules are less
homogeneous (SEEPD does not compensate, SCE
compensates based on a cap curtailment: 50 hours/year).
48
2011. UK Power Networks. All rights reserved
Conclusions
• Allocation of risks among the parties
– Investment risk:
Generally transferred to the generators when an upgrade to
the distribution network is required. When a transmission
network upgrade is necessary the investment risk is
transferred to the users. Thus, regulation allows the
socialisation of transmission upgrades but not the
socialisation of distribution upgrades.
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2011. UK Power Networks. All rights reserved
Conclusions
• Key lessons relevant to UK Power Networks
− Smart solutions versus conventional reinforcement Determine the way to optimally increase generation capacity behind a constraint versus the option of making the incremental reinforcement. Identification of the equilibrium condition.
‒ Compensation versus no compensation
Find the best arrangement to optimise curtailment in order to reduce the possibility of compensation. Distribution network reinforcements could be an option for mitigating the risk of curtailment. This will attract the interest of generators.
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2011. UK Power Networks. All rights reserved
Conclusions
‒ Publishing interconnection/connection maps as a way
for encouraging connections to less congested points:
Provides more transparency on the status of the
network (valuable information for generators for the
selection of the most convenient connection points)
and accelerates the evaluation process conducted by
the DNOs.
‒ Stakeholder engagement matters:
Promote stakeholder engagement by encouraging
active participation of key parties in the development
and implementation of the Flexible Plug and Play trial.
51
2011. UK Power Networks. All rights reserved
Conclusions
‒ Auction mechanism is an alternative way for
procurement of renewables with focus on small
generators in which price and connection costs are bid:
Applied by SCE (4.9 million customers). A regional
auction mechanism for procurement of small scale
renewables can be seen as a potential option to
accelerate the connection of the most cost-efficient
projects. This option may add more complexity to the
energy procurement process in terms of
implementation when there is not enough demand.
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2011. UK Power Networks. All rights reserved
Next steps
• Publish the report as working paper (EPRG), academic
journals (shorter versions): IEEE Transactions on Power
Systems, Energy Policy.
• Writing new report examining the costs and benefits of
different options for connecting non-firm generation to
the DNO networks, while taking decisions on when to
reinforce into account.
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2011. UK Power Networks. All rights reserved
Flexible Plug and Play Offer
• On 1 March, FPP customers received:
Cost of FPP connection
Interruptible Connection Agreement template
Briefing Document explaining the rules of FPP and Calculation of
the Quota
Curtailment estimates for now and worst case scenario
2011. UK Power Networks. All rights reserved
Cost of Connection
• Projects received immediate capex savings
Wind Farm 33 kV 11 kV BAU offer FPP Connection Cost
A 0.5 £1.9 m £ 235 k
B 2.5 £2.0 m £157 k
C 1 £2.0 m £ 385 k
D 7.2 £3.5 m £ 880 k
E 10 £4.8 m £ 590 k
F 5 £1.2 m £ 650 k
2011. UK Power Networks. All rights reserved
Capacity quota Methodology
57
1. Calculate the reinforcement cost (£4.1m)
2. Curtailment modeling results (MWh curtailed / MW connected behind the constraint)
3. Generator revenue loss assumptions (determine £/MW of curtailed output)
March Grid calculations indicate a quota of 33.5 MW
2011. UK Power Networks. All rights reserved
Curtailment Estimates
58
The Flexible Plug and Play connection offer includes:
Curtailment estimates, considering the worst case scenario of when
the “Quota” is full.
2011. UK Power Networks. All rights reserved
Curtailment Estimates
59
Scenario 3, full quota, 5-year power output
2011. UK Power Networks. All rights reserved
Next Steps
• Facilitate due diligence on offers and respond to questions
• Support the customers as required to acceptance of their connection offers
and discussions with financing bodies
• Define how the capacity quota will be managed
• Continue to identify potential customers in the FPP trial area and offer the FPP
solution
• Continue discussions around cost allocation, reinforcement guarantees and
potential commercial solutions
• Learning and dissemination / Stakeholder engagement
• Assessment for BAU implementation