10 May 2017 Welcome and Housekeeping Agenda: 09:00 REGISTRATION - - PowerPoint PPT Presentation

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10 May 2017 Welcome and Housekeeping Agenda: 09:00 REGISTRATION - - PowerPoint PPT Presentation

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LCCC and ESC Supplier Event 10 May 2017 Welcome and Housekeeping Agenda: 09:00 REGISTRATION 09:25 Jennifer Snelson Welcome and Housekeeping 09:30 Ruth Herbert Introduction to LCCC and ESC 09:50 Dan Harry Review of Financial year

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LCCC and ESC Supplier Event

10 May 2017

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Welcome and Housekeeping

  • Agenda:

lowcarboncontracts.uk

09:00 REGISTRATION 09:25 Jennifer Snelson – Welcome and Housekeeping 09:30 Ruth Herbert – Introduction to LCCC and ESC 09:50 Dan Harry Review of Financial year Highlights 10:05 Andrew Miller – Forecasting, SOFM 10:30 Jack Barber - Transparency Tool 10:50 BREAK (20mins) 11:10 Dan Harry & Matt Johnson – CFD 11:35 Dan Harry & Matt Johnson – Capacity Market 12:00 Jennifer Snelson – Future stakeholder engagement and close 12:20 Lunch & Networking (70mins) 13:30 END

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Welcome and Housekeeping

Disclaimer: “These presentations (including all content, whether oral or in writing) have been prepared for the exclusive use and benefit of those recipients to whom they are addressed. Unless LCCC provides express prior written consent, no part of these presentations should be reproduced, distributed or communicated to any third party. The content of these slides and any statements made by LCCC in the presentations are provided in good faith; however, neither the content of the slides nor any statements made are or are intended to be any form of representation, undertaking, warranty or legal or other professional advice.”

lowcarboncontracts.uk

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Introduction to LCCC and ESC

Ruth Herbert, Head of Strategy and External Relations

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About LCCC and ESC

The Low Carbon Contracts Company and Electricity Settlements Company are government-owned, non-profit private companies with designated roles under the 2014 Electricity Market Reform Regulations. LCCC and ESC operate under a cost- sharing arrangement and LCCC delivers all of ESC’s Capacity Market responsibilities.

lowcarboncontracts.uk

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LCCC operations

lowcarboncontracts.uk

Role Responsibilities Scale FY 2016/17 CFD Counterparty

  • Pre-allocation

activities

  • Manage CFDs
  • nce allocated

10 GW portfolio:

  • 40 contracts of 15-

yr duration

  • 1 contract of 35-yr

duration

£92m payments for 647MWh

(1xsolar, 1xbiomass conversion)

Capacity Market Settlement Body (on behalf of ESC)

  • Manage CM

financial transactions incl. credit cover

  • Meter assurance

Market-wide:

  • 25 companies hold

46 active TA* agreements in 2016/17

  • 133 companies hold

1,585 valid agreements (T-1, TA, T-4)

£9.2m payments for 620MW available capacity

(2-50MW generators and DSR)

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Responsibilities on CFD and CM schemes

lowcarboncontracts.uk [outsourced to EMR Settlement Ltd]

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Generic CFD Overview – Roles and responsibilities

lowcarboncontracts.uk

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Management of Round 1 CFDs

lowcarboncontracts.uk

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SLIDE 10

lowcarboncontracts.uk

CFD capacity will increase over time

Source: CFD Register

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lowcarboncontracts.uk

CFD payments are likely to increase over time

Source: CFD Register LCCC only forecasts out to 15-months as beyond this uncertainty is too great

CFD payments approx. £400m/year

Sources: CFD Register 2017 Power Prices SOFM Load Factors LCCC gross demand 2017

Challenges with forecasting further out: Suppliers need to take a view on supply and demand to inform assumptions:

  • Power prices
  • Market share
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CFD evolution

lowcarboncontracts.uk

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Capacity Market evolution

lowcarboncontracts.uk

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Managing GB Supplier Levies

lowcarboncontracts.uk

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Financial Review of the Year

Daniel Harry, Financial Controller

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Contracts for Difference

lowcarboncontracts.uk

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Capacity Market

lowcarboncontracts.uk

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Settlement System

lowcarboncontracts.uk

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Settlement System Change Programme

lowcarboncontracts.uk

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LCCC – Operating Costs 2016/17

lowcarboncontracts.uk

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ESC Operating Costs

lowcarboncontracts.uk

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LCCC 17/18 Budget

lowcarboncontracts.uk

Changes to system included in operating cost for 17/18

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ESC 17/18 Budget

lowcarboncontracts.uk

Changes to system included in operating cost for 17/18

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Forecasting Team

Andrew Miller, Head of Forecasting

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Contents

  • 1. Introduction
  • 2. Why forecast?
  • 3. How do we forecast?
  • 4. How can we find out more?
  • 5. I don’t understand the latest forecasts!
  • 6. How are the regulations changing?
  • 7. Q&A

lowcarboncontracts.uk

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Introduction – the team

lowcarboncontracts.uk

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Why do we forecast? We forecast to ensure we can meet our CFD

  • bligations and to help you plan and prepare

lowcarboncontracts.uk

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How do we forecast? – our toolset We have the tools to calculate the 19 in 20 risks

lowcarboncontracts.uk

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Forecasting toolset

lowcarboncontracts.uk

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How can we find out more? We communicate to help you understand the levy

lowcarboncontracts.uk

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I don’t understand the latest 15 month forecasts The total reserve amount may vary up and down

lowcarboncontracts.uk

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15 Month Forecast ILR with Low and High Case

lowcarboncontracts.uk

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15 Month Forecast TRA with Low and High Case

lowcarboncontracts.uk

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What’s new? Regulation change has improved efficiency

lowcarboncontracts.uk

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Illustration of SRA and Reconciliation Payments: Revised Regulations will give you money back quicker

lowcarboncontracts.uk

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Transparency Tool Demo with Jack Barber & Questions and Answers

lowcarboncontracts.uk

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Changes to CFD 2017-2018

Daniel Harry, Financial Controller

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Energy Intensive Industries

lowcarboncontracts.uk

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Green Excluded Electricity

lowcarboncontracts.uk

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Capacity Market

Matthew Johnson, Settlement Lead

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The Capacity Market

  • Designed to ensure sufficient, reliable capacity in periods of system stress
  • Technology neutral, focusing purely on Security of Supply
  • Gives eligible Capacity Providers reliable revenue stream in the form of Capacity Payments
  • Capacity providers face penalties if they fail to deliver capacity when required
  • Philosophy is to allow the market to competitively set the price for capacity
  • Auctions operate on a T-4 year basis with a T-1 year “top up”
  • Transitional Arrangements in place for DSR

lowcarboncontracts.uk

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Capacity Market Structure

lowcarboncontracts.uk

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Capacity Market operational roles and responsibilities: from pre-qualification to conclusion of the auction

lowcarboncontracts.uk

Task from applicant perspective Task Owner Task Co-ordinator Prequalification submission Applicant National Grid Prequalification assessment National Grid National Grid Credit cover submission Applicant ESC Credit cover approval ESC ESC Capacity auction Applicant National Grid Capacity auction results National Grid National Grid

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Capacity Market operational roles and responsibilities: post auction assurance work

lowcarboncontracts.uk

Task from applicant perspective Task Owner Task Co-ordinator Outstanding metering data submitted Applicant National Grid Metering assessment Applicant National Grid Metering assessment review National Grid National Grid Metering statement/test Applicant ESC Metering test certification ESC ESC DSR test request Applicant National Grid Provision of historic DSR baseline data ESC National Grid DSR test pass National Grid National Grid CM termination National Grid National Grid

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Capacity Market operational roles and responsibilities: Delivery Year

lowcarboncontracts.uk

Task from applicant perspective Task Owner Task Co-ordinator Settlement ESC ESC Metering Site Visit ESC ESC Provision of historic SPD baseline data ESC National Grid Satisfactory Days Performance Applicant National Grid Obligation Trading Applicant National Grid Volume Reallocation Trading Applicant ESC CM termination National Grid National Grid

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Capacity Market Forecast Costs by Delivery Year (October - September)

lowcarboncontracts.uk

Auction Current Capacity MW Auction Clearing Price KW Annual Value £ 2014 T-4 47,530.843 19.40 £ 922,098,354 £ 2015 T-4 46,353.569 18.00 £ 834,364,242 £ 2015 TA 620.347 27.50 £ 17,059,543 £ 2016 T-4 52,425.302 22.50 £ 1,179,569,295 £ 2016 T-1 (ECA) 54,433.634 6.95 £ 378,313,756 £ 2016 TA 312.171 45.00 £ 14,047,695 £

2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 >>> Total to 2035/36 2014 T-4

  • £
  • £

922,098,354 £ 74,661,075 £ 74,661,075 £ 14,501,267 £ >>> 1,244,809,245 £ 2015 T-4

  • £
  • £
  • £

834,364,242 £ 17,685,360 £ 17,685,360 £ >>> 1,081,726,722 £ 2015 TA 17,059,543 £

  • £
  • £
  • £
  • £
  • £

>>> 17,059,543 £ 2016 T-4

  • £
  • £
  • £
  • £

1,179,569,295 £ 59,597,010 £ >>> 2,011,673,138 £ 2016 T-1 (ECA)

  • £

378,313,756 £

  • £
  • £
  • £
  • £

>>> 378,313,756 £ 2016 TA

  • £

14,047,695 £

  • £
  • £
  • £
  • £

>>> 14,047,695 £ 2017 T-4

  • £
  • £
  • £
  • £
  • £

????? >>>

  • £

Future T-1 Auctions

  • £
  • £

????? ????? ????? ????? >>>

  • £

Total 17,059,543 £ 392,361,451 £ 922,098,354 £ 909,025,317 £ 1,271,915,730 £ 91,783,637 £ >>> 4,747,630,098 £

Significant levels of Capacity Market spend starts October 2017

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Capacity Market Settlement Flows

lowcarboncontracts.uk

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Capacity Market Key Supplier Milestones

lowcarboncontracts.uk

Settlement Activity Suppliers

From EMRS G15 document

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ESC and the Supplier community

lowcarboncontracts.uk

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Stakeholder Engagement

Jennifer Snelson, Communications and External Relations Manager

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Current engagement

  • Stakeholder Bulletin
  • Joint ‘Introduction to EMR for New Suppliers’ events with EMRS

– 18 May

  • ILR and TRA Webinars
  • Industry events
  • Info@lowcarboncontracts.uk
  • LCCC Website

lowcarboncontracts.uk

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LCCC Website

lowcarboncontracts.uk

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Contact Us

  • Email: info@lowcarboncontracts.uk
  • Tel: 02072118111
  • Feedback forms

lowcarboncontracts.uk