TADG Working Group Issues & consequences TADG 6 th Meeting - - - PowerPoint PPT Presentation

TADG

TADG Working Group – Issues & consequences

TADG 6th Meeting - December 2006 Millbank, London

TADG

Approach adopted in TADG

Views expressed at first meeting on the need for assessment of issues/ problems with the current arrangements and to better understand process of development of agency models Ofgem developed proposed framework set out at Meeting 2 Discussed the issues/ problems associated with growth of DG in next three meetings in the context of:

– Operation & planning – Access & charging

A number of agency models have been proposed by the group

TADG

Summary of issues raised

• The following issues / problems and associated consequences

have been raised by at least one party in a TADG meeting:

• 1. small DG bypassing GB queue, impacting on other users
• 2. accuracy of information available to NGET on growth of small DG,

impact on transmission investment

• 3. gap in contractual framework for exports from non-BEGA DG, impact
• n rights & obligations
• 4. growth of non-BEGA DG / DG not actively participating in BM, impact
• n constraint management
• 5. perverse incentives from differential treatment in transmission charging

for DG under 100MW

• 6. cost-reflectivity of differential treatment in transmission charging for

DG under 100MW

TADG

Issue 1: Impact on GB queue

Issues

– No contractual arrangements between NGET and any party in relation to energisation of new small DG connections not covered by CAP097 – implications for availability of transmission capacity for other users

Consequences

– perverse incentives to size DG below upper threshold for small power station to get earlier connection date – growth of DG reduces availability of transmission capacity which may be allocated to other users, and may trigger requirement for transmission reinforcement

TADG

Issue 2: Information available to NGET

Issues

– No contractual arrangements between NGET and any party in relation to energisation of new small DG connections not covered by CAP097 – implications for information provision to NGET in planning timescales and for signals on NGET to invest in the transmission system

Consequences

– NGET have visibility of DG connections through DNO week 24 data but have concerns on data accuracy and volatility and its use as a basis for investment decisions

TADG

Issue 3: Rights/obligations of non-BEGA DG

Issues

– Gap in contractual framework in relation to exports from the distribution system to transmission system not associated with BEGA DG – implications for transmission rights and obligations of affected users

Consequences

– No compensation mechanism for curtailment of transmission access for non-BEGA DG – Exports from the distribution system to the transmission system and

• utput from non-BEGA DG not explicitly covered in the transmission

charging methodology

TADG

Issue 4: Impact on constraint management

Issues

– No formalised procedure for NGET to constrain down DG not actively participating in BM – implications for system operation

Consequences

– Boundary overloads exacerbated or more difficult to manage – NGET currently constrain plant with TEC instead, or enter commercial balancing services agreements on bilateral basis with individual DG

TADG

Issue 5: Perverse incentives

Issues

– DG treated as either transmission-connected generation or as negative demand in transmission charging, based on size threshold criteria – implications for size/voltage-related incentives

Consequences

– TNUoS charging size threshold creates commercial incentive on DG to size below 100MW to receive embedded benefits rather than pay charges – Embedded benefits similarly create commercial incentive on generators below 100MW to connect to distribution network rather than the transmission network – The trade-off between embedded benefits and exposure to distribution charges is another relevant factor in this choice

TADG

Issue 6: Cost-reflectivity

Issues

– DG treated as either transmission-connected generation or as negative demand in transmission charging, based on size threshold criteria – implications for cost-reflectivity

Consequences

– avoided transmission investment is not proportional to TNUoS embedded benefit – new DG connections may trigger transmission infrastructure reinforcement without being charged TNUoS – BEGA DG have same product (TEC) as transmission-connected generation but don’t pay generation TNUoS unless over 100MW

TADG

Materiality

The government has set targets of 10GW of installed CHP capacity by 2010 and 10% of electricity sold by suppliers to be sourced from renewable fuels – mostly likely to impact on DG In February 2006, Ofgem requested data on growth of DG Data indicated by 2010:

– an additional 7.2GW of DG – an additional 10GW of directly connected transmission – additional demand of around 3GW

Net position: increase in DG > increase in demand

TADG

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