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 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 lowcarboncontracts.uk
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
Introduction to LCCC and ESC Ruth Herbert, Head of Strategy and External Relations
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
LCCC operations Role Responsibilities Scale FY 2016/17 • CFD Counterparty Pre-allocation 10 GW portfolio: £92m payments activities • 40 contracts of 15- for 647MWh • Manage CFDs yr duration (1xsolar, 1xbiomass • 1 contract of 35-yr once allocated conversion) duration • Manage CM Capacity Market Market-wide: £9.2m payments financial • 25 companies hold Settlement Body for 620MW 46 active TA* transactions incl. available capacity agreements in credit cover (on behalf of ESC) (2-50MW generators 2016/17 • Meter assurance and DSR) • 133 companies hold 1,585 valid agreements (T-1, TA, T-4) lowcarboncontracts.uk
Responsibilities on CFD and CM schemes [outsourced to EMR Settlement Ltd] lowcarboncontracts.uk
Generic CFD Overview – Roles and responsibilities lowcarboncontracts.uk
Management of Round 1 CFDs lowcarboncontracts.uk
CFD capacity will increase over time Source: CFD Register lowcarboncontracts.uk
CFD payments are likely to increase over time Sources: Source: CFD Register CFD Register 2017 Power Prices SOFM Load Factors LCCC gross demand 2017 Challenges with forecasting further out: LCCC only Suppliers need to take a forecasts out view on supply and demand to 15-months to inform assumptions: as beyond this - Power prices uncertainty is - Market share too great CFD payments approx. £400m/year lowcarboncontracts.uk
CFD evolution lowcarboncontracts.uk
Capacity Market evolution lowcarboncontracts.uk
Managing GB Supplier Levies lowcarboncontracts.uk
Financial Review of the Year Daniel Harry, Financial Controller
Contracts for Difference lowcarboncontracts.uk
Capacity Market lowcarboncontracts.uk
Settlement System lowcarboncontracts.uk
Settlement System Change Programme lowcarboncontracts.uk
LCCC – Operating Costs 2016/17 lowcarboncontracts.uk
ESC Operating Costs lowcarboncontracts.uk
LCCC 17/18 Budget Changes to system included in operating cost for 17/18 lowcarboncontracts.uk
ESC 17/18 Budget Changes to system included in operating cost for 17/18 lowcarboncontracts.uk
Forecasting Team Andrew Miller, Head of Forecasting
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
Introduction – the team lowcarboncontracts.uk
Why do we forecast? We forecast to ensure we can meet our CFD obligations and to help you plan and prepare lowcarboncontracts.uk
How do we forecast? – our toolset We have the tools to calculate the 19 in 20 risks lowcarboncontracts.uk
Forecasting toolset lowcarboncontracts.uk
How can we find out more? We communicate to help you understand the levy lowcarboncontracts.uk
I don’t understand the latest 15 month forecasts The total reserve amount may vary up and down lowcarboncontracts.uk
15 Month Forecast ILR with Low and High Case lowcarboncontracts.uk
15 Month Forecast TRA with Low and High Case lowcarboncontracts.uk
What’s new? Regulation change has improved efficiency lowcarboncontracts.uk
Illustration of SRA and Reconciliation Payments: Revised Regulations will give you money back quicker lowcarboncontracts.uk
Transparency Tool Demo with Jack Barber & Questions and Answers lowcarboncontracts.uk
Changes to CFD 2017-2018 Daniel Harry, Financial Controller
Energy Intensive Industries lowcarboncontracts.uk
Green Excluded Electricity lowcarboncontracts.uk
Capacity Market Matthew Johnson, Settlement Lead
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
Capacity Market Structure lowcarboncontracts.uk
Capacity Market operational roles and responsibilities: from pre-qualification to conclusion of the auction 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 lowcarboncontracts.uk
Capacity Market operational roles and responsibilities: post auction assurance work 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 lowcarboncontracts.uk
Capacity Market operational roles and responsibilities: Delivery Year 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 lowcarboncontracts.uk
Capacity Market Forecast Costs by Delivery Year (October - September) Current Auction Clearing Auction Capacity MW 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 lowcarboncontracts.uk
Capacity Market Settlement Flows lowcarboncontracts.uk
Capacity Market Key Supplier Milestones Settlement Activity Suppliers From EMRS G15 document lowcarboncontracts.uk
ESC and the Supplier community lowcarboncontracts.uk
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