Implementation Co-ordination Workshop
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12th February 2015
CM Delivery 2015
 Welcome
 Safety
 Introductions
 Agenda
 Re-Visit 2014 Success Factors
Agenda
Time
09:30
Topic
Introduction
Summary of 2014
Feedback from the 2014 Capacity Auction
Feedback from 2014 Prequalification
10.30
Coffee Break
11.00
IT systems update
Next steps for 2018 Agreement Holders
Expected changes for 2015
2015 Timetable
Q&A
13:00
Close
3
2014 CM Implementation Success Factors
Success
Description
Pre-qualification & the
Auction happened on time
• Planned dates were met / only moved under an agreed governance
process
• The Auction ran and cleared in 2014
• Capacity was procured for delivery year of 2018/19
Pre-qualification ran
smoothly and all applicants
had the best opportunity to
successfully pre-qualify
• Rules/Guidelines were finalised in time, available to everyone, simple to
understand and delivered the results expected
• Procedures were explained, available to everyone, simple to understand
and supportive (e.g. helping not blocking)
• NG Systems were simple to use; ready on time; seen, tested and
understood by applicants in advance; worked as intended and gave the
results expected
• Applicant Systems were ready on time and able to communicate with NG
Systems as expected
The Auction ran smoothly
and all bidders had the best
opportunity to secure a
capacity agreement
• As above for Pre-qualification
• The Auction was “liquid”, included a diverse range of
technologies/applicant sizes and offered best value to consumers
• The Auction Monitor approved the auction outcome
Settlement is on schedule
for delivery
• Smooth transfer of data from NG to Elexon
• Payment/Settlement systems implementation is on track
• Generators and Suppliers are confident of delivery of fit-for-purpose
Settlement systems
Summary of 2014
Ian Nicholas
5
2014 Capacity Market Summary
 67.29GW of Capacity Prequalified
for the 2014 Auction representing
501 Capacity Market Units
 48.6GW target Auction held over
three days and 12 rounds in
December 2014
 49.26GW of Capacity Procured
representing 306 Capacity Market
Units
 Clearing Price of £19.40/kW and
total expenditure in 2018/19 of
approx. £950million (2012
prices)
6
2014 Auction Readiness
 240 Authorised Users ‘Bidders’
 77 Companies
 Multi format user training Material
 3 Auction training Events; 130 users trained/ 900exit bids/13
backup bidding calls/ 30 calls general queries
 Screen Cast
 user guides
 Mock Auction
 Real Auction
7
Feedback
 Since the auction there have been a number of feedback sessions
 We have held lessons learnt sessions internally and with the
Delivery Partners
 DECC held an Industry Feedback session
 Ofgem have commenced their Rule Change Process
 We have assessed other feedback received during the 2014
process.
8
Feedback from the 2014 Capacity Auction
Ian Nicholas
9
Feedback and Q&A from 2014 Auction
Auction
Feedback
How it is being addressed
The auction took a long time to run and the
rounds could be much shorter
Carried out bidder behaviour analysis, likely
suggested change would be similar first
round and recess with latter rounds being
shortened.
Target Capacity needed more transparency
winter outlook and capacity adequacy
reports differed
The reporting uses different methods which
is explained in the modelling stakeholder
engagement, Panel of Technical Experts
involvement and DECC.
Not clear when the results would be
available (intra round results)
The auction guidelines will clarify how DECC
and NG will report the 2015 auction
Why was excess capacity rounded
Remove the opportunity to act when the
capacity is close to clearing the round.
10
Feedback and Q&A from 2014 Auction
Auction
Feedback
How it is being addressed
Can the Price maker status be made public
Ofgem review and rule change process is
looking into this area.
DBA and Exit bid function (1yr refurb issue)
DECC review and rule change process
Information clarity i.e. de rating capacity
entering auction
DECC review and rule change process/
possibly a review of the CM register
summary details.
11
Feedback from 2014 Prequalification
Mark Duffield
12
Feedback and Q&A from 2014 Auction
Prequalification
Feedback
How it is being addressed
Late changes to rules caused a lot of problems
DECC and Ofgem are looking to ensure that any
changes are made in plenty of time this year.
Legal opinion and declaration documents seem over
necessary
We have proposed a Rule Change to combine the
certificates and declarations (P062). A further change
has been proposed to remove the legal opinion
(P023).
Rule 3.4.2 (b) states that a previously provided legal
opinion can “roll over” providing the information
remains accurate and up to date.
Prequalification process is intensive
Many of the rule changes proposed by NGET are
intended to streamline the prequalification process.
We will continue to work with stakeholders to make
prequalification as straightforward as possible.
Appeals process seemed a bit formal for typos or
missing data
The Appeal process is defined in the regulations and,
whilst formal, is necessary to process any changes to
applications.
13
Feedback and Q&A from 2014 Auction
Prequalification
Feedback
Prequalification for Proven DSR is difficult so had to
prequalify as unproven and post a bid bond
Settlement periods used as delivery evidence not the
same as balancing services evidence
DSR have to 'pre qual' for balancing services and it is
completely different-can they be aligned
How it is being addressed
There are a number of Rule changes proposed in this
area (P044, P063 and P082).
Complicated interaction between balancing services
and the CM – we have proposed some rule changes
but it is an area that needs further development with
the industry.
14
Feedback and Q&A from 2014 Auction
Stakeholder engagement/General Feedback
Feedback
How it is being addressed
Lack of enduring IT System for Prequalification
New system being developed, will be covered later on
the agenda.
The system should pre-populate the next prequalification application
We are planning to prepopulate the system with
information submitted during 2014
Need to keep the open comms experienced between
industry and NG for new entrants and the next
implementation w/shops should cater for the two
types of audience; existing and new participants.
We have a schedule for future IC events and we will
be aiming to cover a range of subjects both for those
who have already participated in 2014 and new
entrants for 2015.
FAQ's not always helpful with mandatory/optional
data seemed not to be consistent
We recognise there were issues with some of the
guidance.
Feedback on how to improve them is always welcome
and systems and guidance for 2015 will be improved.
Free text field in CM register contains sensitive info
(i.e. MPAN details)
The contents of the CM register is defined in the
rules. A number of Rule Changes have been
proposed in this area to streamline the Register.
15
Questions?
16
IT Systems Update
Ian Woolley
17
Where are we….
18
High Level Architecture
External
Parties
Energy Industry
& Trade Associations
Comms Channels
Portal
Alerts & Notifications
Existing
Generators
Prospective
Generators
Web
DSR
Aggregators
CfD Admin
Companies &
Users
Allocation
Comms &
Queries
Appeal
Mgmt
Reporting
LCF
Budget
Monitor
2014 CfD Allocation
solution to be evolved
Counterparty &
Settlement Agent
Authentication
Service
FAQ & Guidance
CM Auction Solution
CM Admin
PreQualification
Eligibility
Auction
System
DECC
User
Authentication
Administration System
CRM
CfD Allocation Solution
Ofgem
Secure Email
Public
Participants (market)
Private
Interim Portal Live in June
2014. Upgrades planned for
April and June 2015
Northern Ireland
Parties (SONI)
Obligation
Tracking
Registry
CfD
Contracts
Eligibility
Documentation
CMU
Obligations
Auction
System
CM Auction
solution
19
live November 2015
New CM
Administration
solution to be live
June 2015
CM Admin system - Plan on a Page
All "End" Dates
2014
Dec
2015
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Admin System Development
Design/Requirements
Portal 03/02, CM 19/02
Development
Portal 03/03, CM 14/04
Test Preparation
Portal 13/02, CM 10/03
UAT
Portal 25/03, CM 27/05
Training
Portal 26/03, External 29/06
Environments
Live 24/03
Go Live
Regime Cycle
Portal 10/04
Key:
System training (ext)
Portal Milestones
Familiarisation
CM Milestones
Window opens
Regime/Rules Milestones
Window closes
CM 23/06
Pre-Qual open 20/07
Pre-Qual closes 14/08
Stakeholder Events
Assessment
Results 25/09
Engagement & Change
 Engagement
 There will be an IS representative at all Implementation Coordination events
 We will keep you updated on progress
 We will communicate issues to you at earliest opportunity
 We will provide “Proof-of-Concept” demonstrations at appropriate points
 Change
 We are working very closely with DECC, Ofgem and other Stakeholders to
understand and provide for necessary Regulation and Rule changes
 Where we have confident forward visibility we are building this in
 IBM/Power Auctions are supporting us in change impact assessments
 We will mobilise an Auction Solution change project once we have clarity
Questions?
22
Next Steps for 2018 Agreement Holders
Robyn Jenkins
23
Overview
Monitoring
Construction
Milestones
Financial
Commitment
Milestone
Substantial
Completion
Milestone
New Build



Refurbishi
ng



Existing
Connection
Agreement
DSR Test

TBC



Proven
DSR
Unproven
DSR
Metering
Assessment



Note – not all of these will apply to every CMU, you should check the CM Register, your Capacity
24
Agreement Notice and seek advice if you are not sure which apply to you.
Monitoring of Construction Progress (Rule 12.2)
 The Capacity Provider of any New Build or Refurbishing CMU must (every
6 months from the date of the auction) provide a progress report for each
Generating Unit in the CMU comprising
 A schedule of earliest and latest dates for construction milestones
(with an explanation of any material change to the last report)
 Any material changes to the works described in the construction plan
 The report must be accompanied by
 An assessment from an Independent Technical Expert
 A certificate from 2 directors that they believe the report is an accurate
and fair view of the matters described
 Such report is required every 6 months until the CMU meets Substantial
Completion Milestone or the Capacity Agreement Terminates
 First report due 16 June 2015 – 6 months from the date of the Capacity
Auction.
25
Satisfying Financial Commitment Milestone (Rule 6.6)
 The fulfilment of the Financial Commitment Milestone requires the submission to
the Delivery Body of an Independent Technical Report (ITE) where the author of
the technical report must declare
 that they are an Independent Technical Expert and
 that the report satisfies the Required Technical Standard
 The ITE report must then declare that
 Capital Expenditure to at least 10% of the Total Project Spend has been
incurred
OR:
 The Capacity Provider has, or will have, sufficient financial resources available
to it to meet the Total Project Spend, and the following commitments have
been made:
 the Capacity Provider has entered into a Major Contract;
 The board of directors have made all of the declarations listed in Rule
6.6.2 (b)
 Deadline – 2 July 2016
26
Substantial Completion Milestone (Rule 6.7)
 New Build CMU will have met SCM if the generating unit(s) is/are operating in
excess of 90% of its Capacity Obligation
 Refurbishing CMU will have met SCM when the generating unit(s) is/are operating
at or in excess of 100% of the Capacity Obligation*
 The Capacity Provider must notify the Delivery Body when an ION is issued (or
equivalent tests are passed)
*DECC have consulted on aligning the requirements for refurbishing CMUs with
those for New Build CMUs
A rule change has been proposed (P028) highlighting that some refurbishment
CMUs will not receive an ION.
27
Evidencing Connection Agreement and/or TEC
 If you declared that a Distribution Connection Agreement will be in
place 18 months prior to the Delivery Year (Rule 3.7.3 (c)) you must submit
the Connection Agreement to the Delivery Body.
 The connection agreement must;
 Permit the export of at the de-rated capacity of the CMUs it applies to
 Contain a Registered Capacity or Maximum Export Capacity figure.
 If you declared the Transmission Entry Capacity will be in place 18
months prior to the Delivery Year (Rule 3.6.3(a) (i)) you must submit the
Grid Connection Agreement to the Delivery Body.
 The connection agreement must;
 Secure sufficient TEC to meet the de-rated capacity of all CMUs it
applies to
 Include the signature pages
 Deadline – 31 March 2017
28
Metering Assessments
 Deadline: 30 September 2015 (T-4 2014
Successful Applicants)
 Who: Successful Applicants who deferred
their metering assessment. (See column AK
from the capacity market register)
 Option 1 - We have developed an excel
form which applicants can complete and
submit. This will be made available from
Friday 13th February on our portal website:
www.emrdeliverybody.com
 Option 2 – The new online system will be available over the summer which
will allow applicants to log in and complete their metering assessment.
29
DSR Tests (Rule 13.2)
 Who: Unproven DSR CMUs who wish to become Proven.
 To carry out a DSR Test the capacity provider must;
 Provide the Delivery Body with the MPAN numbers and any other meter details
necessary to monitor the component and the Metering Test Certificate or
confirmation of the metering configuration for each component (being a
configuration approved by the CM Settlement Body).
 Give the DB notice of its intention to test the DSR CMU through submission of
a form
 The DB may up to 4 hours prior to the settlement period instruct the capacity
provider not to activate the DSR CMU
 Within 5 working days or receipt of the metered volume data the DB must for each
settlement period notify the capacity provider of the Baseline Demand, the DSR
evidenced and the Proven DSR Capacity.

Notification form available from 1 March
 We expect the Portal to be available before most people are ready to do this

Deadline – 31 August 2018
30
Questions?
31
Expected Changes for 2015
Mark Duffield
32
Regulations and Rules changes for 2015
All changes published in draft form in Parliament as The Electricity Capacity
(Amendment) Regulations 2015
 Key Changes affecting Prequalification 2015
 Inclusion of capacity from Interconnectors from the 2019/20 Delivery
Year
 Aggregation of Generating Units
 De Minimis threshold for DSR CMUs
 Ineligibility of EDR Pilot Participants for the Transitional Auctions
 Ability to submit additional information at Tier 1 Dispute
 Other Changes not affecting Prequalification
 Provisions relating to the repayment of capacity payments
 Demonstrating Satisfactory Performance
33
Regulations and Rules changes for 2015
Regs Changes affecting 2015 Prequalification
 Inclusion of capacity from Interconnectors from the 2019/20
Delivery Year
 Interconnector Owners will be able to participate in capacity market
auctions but will be eligible for 1-year agreements only
 De-rating factors for interconnectors to be determined by the Secretary
of State
 Prospective interconnectors that fail to complete construction face a
“non-completion fee”
 Aggregation of Generating Units
 Restriction on common ownership of CMU components relaxed for
CMUs with Capacity less than 50MW
34
Regulations and Rules changes for 2015
Regs Changes affecting 2015 Prequalification
 De Minimis threshold for DSR CMUs
 Clarity added to Regulations to confirm DSR CMUs only eligible if
meet a 2MW de-minimis capacity
 Ineligibility of EDR Pilot Participants for the Transitional Auctions
 Plant with Electricity Demand Reduction pilot not eligible for the
Transitional Capacity Auctions
 Ability to submit additional information at Tier 1 Dispute
 Special circumstances that were applied to National Grid disputes for
the first auction extended to the second auction
35
Regulations and Rules changes for 2015
Regs Changes not affecting 2015 Prequalification
 Provisions relating to the repayment of capacity payments
 Certain Capacity Payments must be repaid if the agreement is
terminated or if there is a metering fault
 Demonstrating Satisfactory Performance
 If satisfactory performance is not demonstrated by 30 April in a
Delivery Year then payments for whole of May withheld regardless of
when, subsequently, satisfactory performance is demonstrated
36
Regulations and Rules changes for 2015
Rules Changes for 2015
 Ofgem has published 81 separate proposals for amending the
Capacity Market Rules
 Ofgem Consultation planned for Spring 2015 on the changes they
are proposing to take forward and implement in time for
Prequalification in 2015
 All changes to the CM Rules planned to be implemented by June
2015
 National Grid has submitted 29 change proposals in all
 Majority focussed on streamlining prequalification
 Some minor changes to clarify the auction process
 Some proposals requiring further industry development put forward in
expectation they could be implemented in time for 2016
prequalification
37
Questions?
38
2015 Timetable
James Greenhalgh
39
Overview of 2015 Capacity Market
process
2015
Jan
Auction parameterstarget volume, Price
cap (15th June)
Mar
May
Auction
Guidelines
June
July
2016
Prequalification
results for CM
Sept
Nov
Dec
Jan
DECC/Industry
Review Process
Revised Rules
Prequalification
open for CM (T-4
& TA)
8th Dec NG
runs T-4 CM
auction
NG runs
Transitional
CM auction
2015 CM Timeline – Key dates
When
What
Who
By 1st June
Submit Electricity Capacity Report to SoS
Delivery Body
By 15th June
Decision on whether a T-4 auction is to be held
SoS
Late June
Publication of final CM Rules
Ofgem
Late June
CM Pre-qualification System available to applicants
Delivery Body
29th June
Publish “Formal” Auction Guidelines (T-4 & TA)
Delivery Body
20th July – 14th Aug
Pre-qualification window open for Applicant submissions (T-4 & TA)
Applicants
14th Aug – 25th Sept
Assessment of Pre-qualification submissions (T-4 & TA)
Delivery Body
25th Sept
Pre-qualification Results Day (T-4 & TA)
Delivery Body
17th Nov
Publish “Final” Auction Guidelines & Bidder details (T-4 only)
Delivery Body
25th Nov
Run “Mock” Auction (T-4 only)
App / DB
8th – 11th Dec
Run “Full” Auction and notify bidders of provisional results (T-4 only)
App / DB
15th Dec
Auction Monitor report submitted to SoS (T-4 only)
Auction Monitor
23rd Dec
Auction Results Day (T-4 only)
DB / DECC
5th Jan 2016
Publish “Final” Auction Guidelines & Bidder details (TA only)
Delivery Body
13th Jan 2016
Run “Mock” Auction (TA only)
App / DB
22nd Jan 2016
Issue Capacity Agreements (T-4 only)
Delivery Body
26th – 29th Jan 2016
Run “Full” Auction and notify bidders of provisional results (TA only)
App / DB
2nd Feb 2016
Auction Monitor report submitted to SoS (TA only)
Auction Monitor
10th Feb 2016
Auction Results Day (TA only)
DB / DECC
26th Feb 2016
Issue Capacity Agreements (TA only)
Delivery Body 41
Stakeholder events Calendar 2015
2015
Jan
Feb
March
Feb
March
April
May
June
June
July
12th
18th
15th
19th
2nd
17th
6th
April
AM
AM
AM+PM
AM+PM
AM
AM+PM
AM
May
June
July
Prequalification
open for CM (T-4
& TA)
Sept
Information
 DECC Stakeholder Bulletins
 contact Harry Bannister harry.bannister@decc.gsi.gov.uk
 National Grid
 Portal
https://emrdeliverybody.com
 Mail list
emr@nationalgrid.com
 Helpline
01926 655300
 Alternatively contact
james.greenhalgh@nationalgrid.com
43
Questions?
44