The background
We provided Ofgem with modelling support as part of their Targeted Charging Review (TCR) into residual network charging arrangements.
The initial Embedded Benefits Review (CMP264/265) considered the impact of removing the ability for distribution-connected generation to avoid transmission network charges (TNUoS). The TCR expanded on this work to include a wider range of network users – namely, behind-the-meter and onsite generation and storage – as well as considering distribution network charges (DUoS).
Our solution
It also explored the implications of removing the transmission generation residual (TGR) and the embedded benefit derived from balancing system charges (BSUoS).
In partnership with Frontier Economics, we used our EnVision model to analyse the likely impacts of changing the levels of these incentives at the individual asset level, and from the perspectives of consumers and the system. The key metrics we produced to evaluate the alternatives included:
- GB capacity mix, including changes to levels of on-site generation
- Total system and consumer costs
- Peak and baseload wholesale prices
- Carbon emissions intensity
This analysis and its conclusion could be sensitive to the overall generation fleet mix and the level of penetration of behind-the-meter generation. To account for this, we replicated our analysis against the backdrop of two contrasting Future Energy Scenarios (FES) as set out by National Grid: Steady Progression and Community Renewables.
The results
Our analysis formed part of the evidence for Ofgem’s draft impact assessment and was published alongside Ofgem’s minded-to decision papers. Click to access the draft assessment.
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