Charging Review
Jon Wisdom – National Grid
Agenda
 Recap of Drivers for Change
 Scope items Update
 Links to future work
The Drivers for Change in Charging
Market
Developments
Regulatory
developments
including
evolution of
European
arrangements
Distributed
Generation
Increased
penetration of
distributed
energy sources
Smart & HH
Metering
New consumer
technologies
Facilitating
Flexibility
Demand side
response,
energy storage,
DSO
Predictable
Charges
Reflecting
Sunk Costs
Improving our
forecasts and
removing
volatility
Ensuring
recovery of
revenue in a
fair manner
from users
3
Interdependencies of a charging
review
What is included in
BSUoS
DSO balancing costs
Linkages here will
drive efficient use of
the whole system
Behind the meter
Majority of new /
battery storage
receives EBs
Treatment of storage at
T&D
NG incentive
opportunity
RIIOT2 implications on
charging forecasts
Options for
charging
Harmonisation of T&D
EBs limit sunk
UoS charging
cost recovery
from smaller G arrangements for EB
Treatment of sunk
costs of transmission
investment
Interconnectors have
similar physical
properties – G and D
Treatment of
Interconnectors
Increases Triad
cost
High triad cost
increases EBs
Review coverage of
embedded benefits
BtM also limits
sunk cost recovery
from smaller G
Further stranding
of T investment
Decreases onshore
G charges
Prevent triad impact on
Generation Residual
(vulnerable) domestic
G/D Split
customers
Broader Harmonisation
of T&D UoS charging
arrangements
avoidance value
Reduced EBs likely
to increase Gen
BtM
Greater clarity on
how sunk costs
will be recovered
through certainty
in charging
Helps ensure
that sunk costs
of investments
are recoverable
Demand TNUoS
(including Triad)
Sunk costs recovered via
Triad – Demand
Part of the sunk costs are
recovered through
locational element
Socialisation of
constraints
Limits role of
single user
Forecast accuracy
User commitment
reduces need for fixed
charges
Balancing rights
Longer term certainty
Adds
& commitment
in charging
complexity to
overall pot
Relationship between charging & access
Access Rights
recovery
rights
Demand response
Facilitating HH elective
metering
Reflecting exporting
How is BSUoS charged
Market and Tariff
forecasts
Offshore local charges
Alternatives to
GSPs
triad
avoidance
EBs benefit D connected
Gs and increase chance of
exporting GSPs
Increases Triad
Increases complexity of
balancing – lack of
information for DSO
Can BtM storage
remove some
T&D charges?
Used to manage
impact of
Behaviour
driven by preconnection
arrangements
Locational charging
for generation
Opportunity for short
term signal?
Cost reflective locational
signal means new Gen sites
in most cost efficient place
Treatment of new
transmission investment
Firm/non-firm offer differences create
imperfect price signals on where to site
Harmonisation of T&D
connection arrangements
Locational Transmission
losses increase price
signal
Zonal losses
implications[CMA]
4
Elements of a Charging Review
Address short term drivers
Ofgem’s Targeted Charging
Review
Ofgem Future Focused Strategy
Today
Summer
2017
2 -3 years
Charging Review scope item priorities – Industry Feedback
Immediate priority areas needing to be progressed in the short term
Facilitating HH
elective metering
Zonal losses
implications [CMA]
Clarifying treatment of
storage
Embedded benefits
quick fixes
Market and Tariff
forecasts
RIIOT2 implications on
charging forecasts
Access Rights
These areas need to be considered in the next two-three years
Treatment of sunk
costs of transmission
investment
Coverage of
embedded benefits
Longer term
treatment of storage
Behind the meter
Demand TNUoS
(including Triad)
G:D (Generation
Demand) Split
Offshore local charges
Longer term certainty
in charging
Treatment of new
transmission
investment
User commitment
These areas need to be considered in a longer time horizon
Long term vision
considerations
What is included in
BSUoS
Harmonisation of T&D
UoS charging
arrangements
Harmonisation of
T&D connection
arrangements
Treatment of
Interconnectors
Single network
charge
Aligning T&D
treatment of storage
Reflecting exporting
GSPs
Locational charging
for generation
DSO balancing costs
Market Splitting/ LMP
Charging Review scope item priorities – Industry Feedback
Immediate priority areas needing to be progressed in the short term
Facilitating HH
elective metering
Zonal losses
implications [CMA]
Clarifying treatment of
storage
Embedded benefits
quick fixes
Market and Tariff
forecasts
RIIOT2 implications on
charging forecasts
Areas to be considered in the next two-three years
Treatment of sunk
costs of transmission
investment
Coverage of
embedded benefits
Longer term
treatment of storage
Treatment of new
transmission
investment
User commitment
Demand TNUoS
(including Triad)
G:D (Generation
Demand) Split
Offshore local charges
Longer term certainty
in charging
How is BSUoS
Charged
Access Rights
Behind the meter
Long term vision
considerations
Areas to be considered in a longer time horizon
What is included in
BSUoS
Harmonisation of T&D
UoS charging
arrangements
Harmonisation of
T&D connection
arrangements
Treatment of
Interconnectors
Single network
charge
Aligning T&D
treatment of storage
Reflecting exporting
GSPs
Locational charging
for generation
DSO balancing costs
Market Splitting/ LMP
Short Term Drivers
2-3 years not in TCR Scope
In Scope of SCR
In scope of TCR but not SCR
Longer Term Issues
Links to other work
Interdependencies of a targeted
charging review
What is included in
BSUoS
DSO balancing costs
Linkages here will
drive efficient use of
the whole system
Reflecting exporting
Alternatives to
GSPs
triad
avoidance
EBs benefit D connected
Gs and increase chance of
exporting GSPs
Increases Triad
Increases complexity of
balancing – lack of
information for DSO
How is BSUoS charged
Behind the meter
Can BtM storage
remove some
T&D charges?
BtM also limits
sunk cost recovery
from smaller G
Further stranding
of T investment
NG incentive
opportunity
RIIOT2 implications
on charging
forecasts
Options for
charging
Harmonisation of T&D
EBs limit sunk
UoS charging
cost recovery
from smaller G arrangements for EB
Treatment of sunk
costs of transmission
investment
Interconnectors have
similar physical
properties – G and D
Treatment of
Interconnectors
Increases Triad
cost
High triad cost
increases EBs
Review coverage of
embedded benefits
Greater clarity on
how sunk costs
will be recovered
through certainty
in charging
Helps ensure
that sunk costs
of investments
are recoverable
Demand TNUoS
(including Triad)
Sunk costs recovered via
Triad – Demand
Socialisation of
constraints
Forecast accuracy
User commitment
reduces need for fixed
charges
Balancing rights
Longer term certainty
Adds
& commitment
in charging
complexity to
overall pot
Relationship between charging & access
Access Rights
recovery
rights
Facilitating HH
elective metering
Broader Harmonisation
of T&D UoS charging
arrangements
Part of the sunk costs are
recovered through
locational element
Limits role of
single user
Demand response
Decreases onshore
G charges
Prevent triad impact on
Generation Residual
(vulnerable) domestic
G/D Split
customers
avoidance value
Reduced EBs likely
to increase Gen
BtM
Majority of new /
battery storage
receives EBs
Treatment of storage at
T&D
Market and Tariff
forecasts
Offshore local
charges
Used to manage
impact of
Behaviour
driven by preconnection
arrangements
Locational charging
for generation
Opportunity for short
term signal?
Cost reflective locational
signal means new Gen sites
in most cost efficient place
Treatment of new
transmission
investment
Firm/non-firm offer differences create
imperfect price signals on where to site
Harmonisation of T&D
connection arrangements
Locational Transmission
losses increase price
signal
Zonal losses
implications[CMA]
8