Modelling the Impact of Transmission Charging Options Project - - PowerPoint PPT Presentation

Date: 11 August 2011 Client: Ofgem

Modelling the Impact of Transmission Charging Options

Project TransmiT Stakeholder Event 11th August 2011

Date: 11 August 2011 Title: Modelling the Impact of Transmission Charging Options 2

Contents

• Background
• Objectives of the study
• Modelling methodology
• Key assumptions and data sources
• Project timelines
• Questions

Date: 11 August 2011 Title: Modelling the Impact of Transmission Charging Options 3

Background

• On 27 May 2011 Ofgem outlined its proposed approach for Project TransmiT
• Ofgem issued tender for analytical support for Project TransmiT on 3 June 2011
• Project kicked off on 23 June 2011
• On 7 July 2011, Ofgem launched a Significant Code Review of electricity transmission

charging

• Redpoint has been working with NGET and Ofgem on constraint forecasting using

PLEXOS since October 2010

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Objectives

Status Quo Imperfect foresight (agent simulation) Perfect foresight Improved ICRP Socialised 2011-2020 2021-2030

• Impact on consumer bills
• Impact on power sector cost
• Detailed outputs
• wholesale electricity prices
• capacity margins
• generation mix
• costs of constraints
• incremental transmission

cost levels

• amount of renewable

generation (by region)

• total carbon emissions

from generation Three

• ptions

T wo methodologies Timeframes Outputs

Specific – mainly based

• n known projects

General – based on generic projects

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Policy levers

Wide set of policy levers to be covered by modelling framework Only one definition of each option can be fully modelled within Project TransmiT timelines – required by beginning of September

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Model components

Cost Data

Transmission charging Generation Plan Unconstrained generation ‘stack’ Constrained ‘stack’/zonal supply/demand Detailed system dispatch

Potential Projects Generation Decision Rules Cost Data

Transmission Plan

Potential Projects Transmission Decision Rules Generation background Transmission background

Full results

Based on NGET’s ELSI model Ofgem’s Explorer Model TEC register NGET’s Transport Model Data from TOs Based on expansion of functionality in NGET’s ELSI model Based on functionality in Redpoint’s Investment Decision Model

PLEXOS TransmiT Decision Model

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Simulation steps

Run Transport Model TNUoS charges Run unconstrained and constrained stacks Expected generation gross margins Constrained boundaries Generation investment decisions Transmission reinforcement decisions Generation retirement and build decisions Transmission reinforcement decisions Step forward 1 year

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Agent simulation/non-perfect foresight

Generation plan Transmission plan

Generation Decision Rules Transmission Decision Rules Existing plant Yr1 Yr1 Existing boundary capacities 5 yr forward view Fix Fix Roll forward to next year 1 2 3 5 yr forward view 1 2 3 4 Cross-visibility of Generation and Transmission plans Unseen Unseen

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Perfect foresight

Iterate to converge

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Generation Decision Rules – New Build

Expected gross margin Forward looking stack + prices Anticipated low carbon support Capital and fixed O&M costs Expected transmission charges Expected levelised non- fuel costs Planning Under Construction Operational Commit

Compare Trigger 1 Trigger 2

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Generation Decision Rules – Retirements

Expected gross margin Forward looking stack + prices Fixed O&M costs Expected transmission charges Expected fixed costs Plan closure Close

Compare Trigger 1 Trigger 2

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Transmission Decision Rules

Expected constraint costs Forward looking constrained stack Capital and fixed O&M costs Expected reinforcement costs Under Construction Operational Commit

Trigger Evaluate different reinforcement

• ptions
• 1. Identify constrained boundaries
• 2. Assume independence or

simple dependencies

• 3. T

est reinforcements on each constrained boundary

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Key assumptions

• Treatment of renewables

– Aim to equate renewables volumes across options by adjusting (implied) support levels

• Treatment of nuclear

– Assume same nuclear build programme under all options

• Treatment of other EMR policy options

– Assume 450 g/kWh Emissions Performance Standard throughout – Assume Strategic Reserve for capacity mechanism

• Choice of boundaries

– Assuming fixed boundaries throughout modelling time horizon – Unique mapping between TNUoS and system zones

• Status Quo policy decisions

– HVDC bootstraps: awaiting policy decision on charging – Offshore: assuming radial connections – Island connections: new TNUoS zones?

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Key data sources

Data Main source Fuel and carbon price assumptions Ofgem Explorer scenarios Demand profile and growth Ofgem Explorer scenarios Future interconnection Ofgem Explorer scenarios Existing plant data and costs NGET constraints model Target generation mix NGET Gone Green scenario Renewables resource availability and maximum build rates NGET Gone Green scenario/ARUP Regional wind output profiles NGET Balancing Mechanism bid-offer pricing assumptions NGET constraints model Gas transport charges by zone/region National Grid Gas Generation investment data (capital costs, O&M costs, technical parameters, cost of capital etc) PB Power/Mott MacDonald /Arup studies for DECC Onshore transmission investment data (known projects with capital costs, O&M costs, cost of capital, construction time etc) Transmission Operators Offshore transmission investment data (capital costs, O&M costs, cost of capital, construction time etc) Offshore Transmission Review

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Overall project plan

Detailed model design Dataset collation Model handover Policy option modelling Model development Proof of concept End-to-end testing Reporting Project kick-off June 2011 July 2011 August 2011 September 2011 October 2011 Stakeholder meetings: Possible further meetings

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QUESTIONS?