TADG 5: CE Electric UK straw men November 2006 1 Overview Range - PowerPoint PPT Presentation

TADG 5: CE Electric UK straw men November 2006 1

Overview • Range of S cenarios – as t he int ent is t o illuminat e t he debat e, a range of These straw men scenarios is present ed t o illust rat e: are intended solely to illuminate the – t he degree of change required for various opt ions; and debate – t he benefit s t hat may st ill be gained by less ext reme approaches There is no intent • Cross-S ection of Customer Groups – t here seems t o be an emerging to argue for (or consensus t hat we should t reat all cust omer groups equit ably (alt hough against) any not necessarily equally). The impact of each scenario on a cross-sect ion specific of cust omer groups is t herefore present ed here proposition Impacts and Opportunities –for each cust omer group, key opport unit ies • and impact s are brought out t o illust rat e t he merit s of each scenario • Matrix Presentation – t his present at ion t akes t he form of a mat rix of scenarios against impact s and opport unit ies for each cust omer group. The aim is t o allow ready comparison bot h as bet ween scenarios and across cust omer groups • S tarting Point for Discussion – t his is not a present at ion of a firm proposal for change. There may be int ernal errors and t here will be equally valid alt ernat ives 2

Current Position • Access Rights – explicit gross for direct ly-cont ract ed generat ors, i.e. As previously t hose wit h a CUS C supplement al, even where t here is co-locat ed noted, any demand; implicit net for suppliers discussion of changes to current • TNUoS / BS UoS exposure – explicit gross for generat ion BMUs; implicit net arrangements for ‘ demand’ BMUs (which would include S VA generat ion) should begin with • Ancillary S ervices & Constraint Management –via BMU a review of the • User Commitment – direct via const ruct ion agreement for direct ly- affect of those cont ract ed generat ors; via dist ribut or under CAP 097 for ‘ significant ’ arrangements embedded generat ion 3

Thin Supplier, Net Changes from Current Position: This option presents a small • Access Rights – current implicit supplier right s made explicit change to current • TNUoS / BS UoS exposure – by current net ‘ demand’ BMUs. As not ed practice, aiming earlier, t hese would include S VA generat ion. The only change suggest ed mainly to clarify: here is t o creat e an explicit TNUoS liabilit y, by net diversified met ered -access rights export -TNUoS liability • Ancillary S ervices & Constraint Management –via BMU, as before, plus -constraint reserve powers by int roducing a new Grid Code requirement on management dist ribut ors. It is suggest ed here t hat t his be modelled on exist ing demand cont rol provisions: it seems reasonable t o assume t hat t his Obligations are would ext end t o compensat ing suppliers for imbalance exposure divided between • User Commitment – as before: direct via const ruct ion agreement for suppliers and direct ly-cont ract ed generat ors; via dist ribut or under CAP 097 for distributors ‘ significant ’ embedded generat ion This assumes charging by GS P Group. It is theoretically possible to charge by GS P, perhaps better reflecting transmission issues (and more likely to result in a flow of funds), but this would be much more complex 4

Thin Supplier, Gross Changes from Thin S upplier, Net: This option • Access Rights – explicit supplier right s remain modifies the ‘Thin Supplier, Net’ • TNUoS / BS UoS exposure – current net ‘ demand’ S VA BMUs broken out int o discret e gross demand and generat ion BMUs. It is suggest ed here t hat straw man to bot h would be charged according t o met ered volumes. This addresses provide for an t he issues of diversified flows raised in previous meet ings. It also element of gross provides flexibilit y t o reflect fluid market s charging • Ancillary S ervices & Constraint Management –via BMU, as before, but perhaps st ronger t hrough est ablishing a discret e S VA generat ion BMU. Grid Code reserve powers remain. It is hoped t hat t his will bring forward market -based solut ions before compulsion is required • User Commitment – as before: direct via const ruct ion agreement for direct ly-cont ract ed generat ors; via dist ribut or under CAP 097 for ‘ significant ’ embedded generat ion. It is suggest ed here t hat neit her S VA demand nor S VA generat ion BMUs provide st able plat forms for user commit ment This could be applied: • by GS P, rather than GS PG; or • to distributors 5

Thin Distributor, Net Changes from Thin S upplier, Net: This option modifies the ‘Thin • Access Rights – supplier right s ext inguished, replaced by right s relat ing Supplier, Net’ t o physical flows (export only) at individual GS Ps straw man to levy exposure – TNUoS charges levied on dist ribut ors (and • TNUoS / BS UoS TNUoS on t hence on suppliers) by reference t o net export TEC (possibly by distributors, who met ered volumes). Current net ‘ demand’ S VA BMUs remain for BS UoS would then pass • Ancillary S ervices & Constraint Management –via BMU and Grid Code charges on to reserve powers as before suppliers User Commitment – as before: direct via const ruct ion agreement for • direct ly-cont ract ed generat ors; via dist ribut or under CAP 097 for ‘ significant ’ embedded generat ion 6

Thick Distributor, Net Changes from Thin Distributor, Net: This option modifies the ‘Thin • Access Rights – dist ribut or right s relat ing t o physical flows (export only) Distributor, Net’ at individual GS Ps remain straw man to exposure – as before: TNUoS charges levied on dist ribut ors • TNUoS / BS UoS increase (and t hence on suppliers) by reference t o net export TEC; and current obligations on net ‘ demand’ S VA BMUs basis for BS UoS distributors • Ancillary S ervices & Constraint Management –via BMU as before, but Grid Code reserve powers replaced by ancillary services cont ract This anticipates direct via const ruct ion agreement for direct ly- • User Commitment – more active cont ract ed generat ors as before; CAP 097 rout e replaced by commit ment dispatch by for net export TEC distribution system control S ymmetry suggests a net import TEC, relieving suppliers of any TNUoS obligation (and perhaps removing them from CUS C) 7

DSO Changes from Thick Distributor, Net: This is one option • Access Rights – dist ribut or right s relat ing t o physical flows at individual for the full DSO GS Ps are expanded t o import as well as export generally • TNUoS / BS UoS exposure – supplier part icipat ion in t he nat ional Balancing considered too mechanism is replaced by dist ribut or part icipat ion. It is suggest ed t hat complex for ready each GS P would be a BMU (or, where t here is net export , t wo) implementation. It • Ancillary S ervices & Constraint Management –via t hese dist ribut or BMUs, is presented here which would be est ablished by GS P, allowing GBS O nodal cont rol. Grid to demonstrate the Code reserve powers may st ill be required degree to which its • User Commitment – via commit ment for net export and import TEC outcomes can be reflected in other options that If distributors are to reflect these costs and obligations fully, they will require some form of balancing mechanism below each GS P. This will require less largely reflect TNUoS and BS UoS onto suppliers. For accuracy, each upheaval interconnector between GS Ps at distribution level will require FMS metering. Registration systems may require more frequent updating This is an interconnector A variant on this would be to leave BEGAs with the GBS O, although this model would dilute the impact of the option 8

Summary • Access Rights – it is relat ively st raight forward t o est ablish right s for eit her The options suppliers or dist ribut ors. This will likely follow t he charging debat e, alt hough presented here t he incidence of cost s may not be ident ical t o ‘ use’ of t he syst em form a continuum. exposure – supplier charging, whet her net or gross, is readily • TNUoS / BS UoS Many of the achievable by GS PG. Dist ribut ion opt ions are possible but more complex: outcomes of a full – t he relat ionship bet ween GBS O and suppliers is dilut ed; and DSO approach can cost s will in any case fall upon suppliers . – be achieved with S ave full DS O, suppliers remain exposed t o BS UoS t hrough t heir BMUs. The lesser changes ‘ t hin supplier, gross’ st raw man would separat e S VA generat ion and S VA demand BMUs • Ancillary S ervices & Constraint Management –while supplier BMUs remain, whet her net or gross, t here is a market -based solut ion available. Grid Code reserve powers may be creat ed t o compel dist ribut ors t o act and, if suppliers are not t aking t he lead in generat ion power flow cont rol, may be enhanced by ancillary cont ract s bet ween generat or & dist ribut or and dist ribut or & GBS O. None of t he opt ions preclude act ive dist ribut ion net work management User Commitment – exist ing obligat ions, part icularly under CAP 097, provide • for st rong signals. Thick dist ribut or and DS O opt ions may enhance t he posit ion: t his requires a review of ways t o ensure efficient MITS invest ment 9