Distributed (Embedded) Generation Benefit
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DCMF Iain Pielage – 4th April 2013
Overview
 Background
 Previous proposal work (GBECM-23)
 Way Forward
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Background
 Exemptible distributed (embedded) generators avoid generation related
transmission changes and receive equivalent demand charges from the
relevant supplier (subject to their own commercial contracts)
 Due to the effect of the residual element within TNUoS, this leads to
an ‘embedded benefit’ of ~ £25/kW (and increasing)
 Also receive BSUoS & Transmission Losses benefits
 Different definition of Transmission across GB.
 At BETTA, a directly connected gen. at 132kV in Scotland located in
close proximity to one which is embedded would arbitrarily pay
~£18/kW more
 Ofgem introduced the time limited small gen. discount in Scotland for
132kV directly connected gen. to address this (SLC C13)
 Ofgem has indicated that it does not considered the current arrangements
as sufficiently cost reflective nor a level playing field for competition and
that an enduring solution is required.
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How Does TNUoS Benefit arise?
 TNUoS consists of two elements
 Locational signal + Residual (revenue recovery)
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TNUoS Locational Elements only
All equal
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Tariffs
10
Inclusion of the Residual Element
20
20
15
15
15
10
10
10
20
£10 embedded benefit
5
Dem
5
Gen
0
0
-5
-5
-5
-5
-10
-10
-10
-10
5
Charging Zones
0
A
B
C
D
E
5
Charging Zones
A
B
Residual
C
D
Dem
Gen
0
E
D@A
paid £10/kW
D@A
paid £5/kW
G@A
pays £10/kW
G@A
pays £15/kW
EG @ A
pays £10/kW
EG @ A
pays £5/kW
 Relative ‘embedded benefit’ is 2 x the residual in this illustrative example - £10/kW
(i.e. Generation Residual Component + Demand Residual Component)
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BSUoS & Losses
 Similar to TNUoS, distributed generation
 does not pay BSUoS
 no adjustment for transmission losses
 Receives both BSUoS and losses benefit.
 Reduces the net demand for associated Supplier
 Reduces Suppliers share of BSUoS and Losses
 Associated costs recovered from other parties.
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Where did we get to? - Recap
 Issue highlighted as a consequence of BETTA
 Charging pre-consultation GB-ECM23 raised to review embedded generator benefit
(linked to Standard Licence Condition SLC C13)
 Work progressed over January – June 2010
 Project TransmiT launched : September 2010
 Consequential impact on GB-ECM23
 At that time, the outcome of SCR was unknown
 CMP213 subsequently raised
 Standard Licence Condition C13 expires 2016
 Allows for enduring charging solution replacement for SLC C13 based on new transmission
charging baseline progressed under CMP213.
 Expectation “that industry will begin work during this time to produce an enduring solution”
Link to Ofgem decision letter:
http://www.ofgem.gov.uk/Networks/Trans/ElecTransPolicy/Charging/Documents1/SLC%20
C13%20decision.pdf
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Previously Considered Options for Change
Supplier
DNO
TODAY
Net
Gross
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Previously Considered Options for Change
Supplier
• Existing arrangements /
minimal disruption
• Ofgem has indicated that
there is an issue
TODAY
Net
• Analysis indicates not costreflective.
Directly addresses costreflectivity issue
Gross
Removes the need for more
complicated contractual
arrangements
~ Requires de-minimus threshold
and robust/transparent
discount level
DNO
~ Could indirectly address
cost-reflectivity issue
~ Introduces massive
implementation complexity
(revenue transfer, nodal
market)
Directly address costreflectivity issue
Removes need for more
complicated contractual
arrangements
Introduces significant
implementation complexity for
same result as gross supplier
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Previously Considered Options for Change
Supplier
• Existing arrangements /
minimal disruption
• Ofgem hasNot
indicated
cost that
there is anreflective
issue
TODAY
Net
• Analysis indicates not costreflective
Directly addresses costreflectivity issue
Gross
Removes the need for more
complicated contractual
arrangements
~ Requires de-minimus threshold
and robust/transparent
discount level
DNO
~ Could indirectly address
cost-reflectivity issue
~ Introduces massive
implementation complexity
(revenue transfer, nodal
market)
Directly address costreflectivity issue
Same
Removes
needresult
for more
from
less
complicated
contractual
complicated
arrangements
model
Introduces significant
implementation complexity for
same result as gross supplier
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Net DNO Model
 Charges still levied on net flow on / off transmission network
 Change from implicit to explicit access rights (injection / off-take)
 DNO manages access rights
SO
DNO purchase explicit nodal
export/import access rights
(i.e. per GSP)
GSP Group
Individual GSPs
Supplier notify DNO demand
(and possibly DG)
requirements
BMU1
DNO
OR
BMU2 BMU3 BMU4 BMU5
BMUX
DG notify DNO directly
of export requirements
Supplier BMUs
 (DNO) Problem: Cannot directly attribute DG to single GSP
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Gross Supplier Model
 Distributed Generation Tariff + Gross Demand Tariff
 Charge Suppliers on Gross HH imports & Gross HH metered output
(versus) current net.
 Sub-options for calculating DG Tariff
 Average Maximum export
 DG Capacity (e.g. over triad)
 Net Locational Tariff + Gross Residual to demand
 TNUoS split into locational + residual elements
 Charge locational to both Suppliers & embedded
 Gross residual charged only to suppliers (demand)
 Sub-options for Gross demand charges – similar to DG Tariff
 Reminder: NGET’s overall revenue recovery remains unchanged
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Embedded Charging – Way Forward
 Main Interaction: CMP213 – Project Transmit.
 Workgroup Consultation closed 15th January 2013
 Expect Final Mod Report to be with Ofgem April 2013
 Proposed way forward: Seeking Views
 Re-establish expert group April / May
 Review previous (GB-ECM23) work;
 Consider consequences of CMP213
 Interaction with DNO charging?
 Other options?
 Possible Timeline:
 Raise CUSC modification proposal May / June
 Ofgem decision, 2014
 Transition period up to 31st March 2016
 Raise Consequential code changes during that time.
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