Update on Review of Embedded Generation Benefits
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Andy Wainwright
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
2
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
3
TNUoS Charges - Locational Element
 Net approach
TNUoS Locational Elements only
30
 Embedded generation nets
with demand
25
Gen
 Therefore subject to a
negative demand locational
signal
Dmd
 Based on output at Triad
20
Tariffs
15
10
5
 Equivalent to generation
signal: zoning limitations
0
-5
A
B
C
Charging Zones
-10
D
E
 Gross approach
 Embedded generation
receives same generation
signal as transmission
connected
 All demand receives
locational signal
4
The effect of the generation residual element
30
Avoidance of
generation
residual charge
25
20
15
Gen
10
Dmd
5
0
-5
A
B
C
D
E
-10
 Embedded generator avoids paying generation residual element
5
The effect of the demand residual element
30
25
20
15
Gen
10
Dmd
5
Netting of
positive
demand
0
-5
A
B
C
D
E
-10

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
6
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
Avoidance of
generation
residual charge
30
25
20
15
Gen
10
Netting of
positive
demand
Dmd
5
0
-5
A
B
C
D
E
2 x Residual
uplift
-10
7
How much benefit should be paid for offsetting +ve demand?
Annuitised demand related infrastructure costs
NGET GSP infrastructure
reinforcement costs
4
3.5
3
£/kW
2.5
2
Average
1.5
1
0.5
0
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
Project
Year
Cost
Residual
2012/13
£1.41/kW
£27.07/kW
2009/10
£1.30/kW
£20.74/kW
(equates to £1.47/kW
in 2012/13)1
(equates to £23.53/kW
in 2012/13) 1
1 RPI
factor for 2009/10 to 2012/13 = 1.132992
8
Should embedded generation pay for transmission?
Average TNUoS charge: £7.57/kW (2013/14)
Comparing transmission and
distribution charges
Note 2013/14 average TNUoS
charge: £7.75/kW
How does embedded generation use transmission?
Transmission Function (Use)
Transmission
connected G
Embedded G
 inject
 Net
Access to Market (s) GB & wider EU


Security / Quality of Supply


Net transfers
9
Other areas under consideration
Exporting GSPs
Impact on >100MW generators
Offshore Transmission Implications
10
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
11