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Update on Review of Embedded Generation Benefits

Andy Wainwright

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Background

Standard Licence Condition C13

Introduced at BETTA (2005)

Addressed different treatment of 132kV connected small generation in Scotland (transmission) with that in England and Wales (embedded)

Time limited: due to expire 1st April 2016

Embedded review needs to consider overall implications on GB generation

Informal industry focus group established Spring 2013

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Objectives of transmission charges

Cost reflectivity

Facilitate competition

Developments in transmission businesses

Recover transmission costs

Non-discrimination

Affected transmission ‘charges’

TNUoS BSUoS Losses

Focus Group agreement to consider TNUoS first

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TNUoS Charges - Locational Element

-10

-5

0

5

10

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25

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A B C D E

Gen

Dmd

TNUoS Locational Elements only

Charging Zones

Ta

riffs

Net approach

Embedded generation nets with demand

Therefore subject to a negative demand locational signal

Based on output at Triad

Equivalent to generation signal: zoning limitations

Gross approach

Embedded generation receives same generation signal as transmission connected

All demand receives locational signal

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The effect of the generation residual element

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-5

0

5

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25

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A B C D E

Gen

Dmd

Avoidance of generation

residual charge

Embedded generator avoids paying generation residual element

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The effect of the demand residual element

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-5

0

5

10

15

20

25

30

A B C D E

Gen

DmdNetting of positive demand

Positive demand can avoid paying the demand residual element if able to net with embedded generation

Embedded generation therefore has a value equal to the demand residual element

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Combination of both residual elements In summary, embedded generation can receive TNUoS ‘benefit’

through two effects on residual elements;

netting of positive demand (i.e. reducing demand charge)

avoidance of generation residual charge

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-5

0

5

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A B C D E

Gen

Dmd

Avoidance of generation

residual charge

Netting of positive demand 2 x Residual

uplift

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Year Cost Residual

2012/13 £1.41/kW £27.07/kW

2009/10 £1.30/kW

(equates to £1.47/kW in 2012/13)1

£20.74/kW

(equates to £23.53/kW in 2012/13) 1

1 RPI factor for 2009/10 to 2012/13 = 1.132992

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0.5

1

1.5

2

2.5

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3.5

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

£/kW

Project

Annuitised demand related infrastructure costs

Average

How much benefit should be paid for offsetting +ve demand?

NGET GSP infrastructure reinforcement costs

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Average TNUoS charge: £7.57/kW (2013/14)

Transmission Function (Use) Transmission connected G

Embedded G

Net transfers inject NetAccess to Market (s) GB & wider EU

Security / Quality of Supply

Should embedded generation pay for transmission?

How does embedded generation use transmission?

Comparing transmission and distribution charges

Note 2013/14 average TNUoS charge: £7.75/kW

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Other areas under consideration

Impact on >100MW generators

Exporting GSPs

Offshore Transmission Implications

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Next steps

National Grid report to be published October

Include Focus group & bi-lateral discussions

Three week open letter

Formal CUSC modification proposal potentially later in Autumn