Charging Review Jon Wisdom National Grid
Agenda Recap of Drivers for Change Scope items Update Links to future work
The Drivers for Change in Charging Market Developments Distributed Generation Smart & HH Metering Facilitating Flexibility Predictable Charges Reflecting Sunk Costs Regulatory developments including evolution of European Increased penetration of distributed energy sources New consumer technologies Demand side response, energy storage, DSO Improving our and removing volatility Ensuring recovery of revenue in a fair manner from users 3
Interdependencies of a charging review Linkages here will drive efficient use of the whole system How is BSUoS charged Market and Tariff NG incentive opportunity RIIOT2 implications on charging DSO balancing costs Increases complexity of balancing lack of information for DSO Can BtM storage remove some T&D charges? Behind the meter receives EBs Treatment of storage at T&D Treatment of Interconnectors Forecast accuracy reduces need for fixed charges Adds complexity to overall pot recovery Majority of new / battery storage Interconnectors have similar physical properties G and D Options for charging Reduced EBs likely to increase Gen BtM Further stranding of T BtM also limits sunk cost recovery from smaller G Greater clarity on how sunk costs will be recovered through certainty Longer term certainty Relationship between charging & access rights What is included in BSUoS Alternatives to triad avoidance EBs benefit D connected Gs and increase chance of exporting GSPs Review coverage of embedded benefits EBs limit sunk cost recovery from smaller G Treatment of sunk costs of transmission Helps ensure that sunk costs of s are recoverable User commitment Balancing rights & commitment Used to manage impact of Reflecting exporting GSPs Increases Triad avoidance value High triad cost increases EBs UoS charging for EB Limits role of single user Access Rights Socialisation of constraints Behaviour driven by preconnection Generation Residual G/D Split Increases Triad cost Sunk costs recovered via Triad Demand Part of the sunk costs are recovered through locational element Treatment of new transmission connection Offshore local charges Opportunity for short term signal? Decreases onshore G charges Demand TNUoS (including Triad) Cost reflective locational signal means new Gen sites in most cost efficient place Firm/non-firm offer differences create imperfect price signals on where to site Demand response Locational charging for generation Facilitating HH elective metering Prevent triad impact on (vulnerable) domestic customers Broader Harmonisation of T&D UoS charging Locational Transmission losses increase price signal Zonal losses implications[cma] 4
Elements of a Charging Review Address short term drivers Ofgem s Targeted Charging Review Ofgem Future Focused Strategy Today Summer 2017 2-3 years
Charging Review scope item priorities Industry Feedback Immediate priority areas needing to be progressed in the short term Facilitating HH elective metering Zonal losses implications [CMA] Clarifying treatment of storage Embedded benefits quick fixes Market and Tariff RIIOT2 implications on charging These areas need to be considered in the next two-three years Treatment of sunk costs of transmission Coverage of embedded benefits Longer term treatment of storage Behind the meter Demand TNUoS (including Triad) Access Rights G:D (Generation Demand) Split Offshore local charges Longer term certainty Treatment of new transmission User commitment These areas need to be considered in a longer time horizon What is included in BSUoS UoS charging Harmonisation of T&D connection Treatment of Interconnectors Long term vision considerations Single network charge Aligning T&D treatment of storage Reflecting exporting GSPs Locational charging for generation DSO balancing costs Market Splitting/ LMP
Charging Review scope item priorities Industry Feedback Immediate priority areas needing to be progressed in the short term Facilitating HH elective metering Zonal losses implications [CMA] Clarifying treatment of storage Embedded benefits quick fixes Market and Tariff RIIOT2 implications on charging Areas to be considered in the next two-three years Treatment of sunk costs of transmission Coverage of embedded benefits Longer term treatment of storage Treatment of new transmission User commitment Demand TNUoS (including Triad) G:D (Generation Demand) Split Offshore local charges Longer term certainty How is BSUoS Charged Access Rights Behind the meter Areas to be considered in a longer time horizon What is included in BSUoS Aligning T&D treatment of storage UoS charging Reflecting exporting GSPs Harmonisation of T&D connection Locational charging for generation Treatment of Interconnectors DSO balancing costs Long term vision considerations Single network charge Market Splitting/ LMP Short Term Drivers 2-3 years not in TCR Scope In Scope of SCR In scope of TCR but not SCR Longer Term Issues Links to other work
Interdependencies of a targeted charging review Linkages here will drive efficient use of the whole system How is BSUoS charged Market and Tariff NG incentive opportunity RIIOT2 implications on charging DSO balancing costs Increases complexity of balancing lack of information for DSO Can BtM storage remove some T&D charges? Behind the meter receives EBs Treatment of storage at T&D Treatment of Interconnectors Forecast accuracy reduces need for fixed charges Adds complexity to overall pot recovery Majority of new / battery storage Interconnectors have similar physical properties G and D Options for charging Reduced EBs likely to increase Gen BtM Further stranding of T BtM also limits sunk cost recovery from smaller G Greater clarity on how sunk costs will be recovered through certainty Longer term certainty Relationship between charging & access rights What is included in BSUoS Alternatives to triad avoidance EBs benefit D connected Gs and increase chance of exporting GSPs Review coverage of embedded benefits EBs limit sunk cost recovery from smaller G Treatment of sunk costs of transmission Helps ensure that sunk costs of s are recoverable User commitment Balancing rights & commitment Used to manage impact of Reflecting exporting GSPs Increases Triad avoidance value High triad cost increases EBs UoS charging for EB Limits role of single user Access Rights Socialisation of constraints Behaviour driven by preconnection Generation Residual G/D Split Increases Triad cost Sunk costs recovered via Triad Demand Part of the sunk costs are recovered through locational element Treatment of new transmission connection Offshore local charges Opportunity for short term signal? Decreases onshore G charges Demand TNUoS (including Triad) Cost reflective locational signal means new Gen sites in most cost efficient place Firm/non-firm offer differences create imperfect price signals on where to site Demand response Locational charging for generation Facilitating HH elective metering Prevent triad impact on (vulnerable) domestic customers Broader Harmonisation of T&D UoS charging Locational Transmission losses increase price signal Zonal losses implications[cma] 8