company position: project transmiT
Last updated: 03/01/2012
We support the objectives of the Significant Code Review under Project TransmiT and the specific focus on connections and charging methodology.
We believe that the current embedded arrangements should be maintained to encourage as much distributed generation as possible.
The review should also be concluded as swiftly as possible to avoid unnecessary costs and uncertainty for consumers and investors.
transmission charging
Having the correct signals in charging arrangements is important to encourage investment. Although we believe that generation and demand should pay for the costs they incur on the system, we acknowledge that the flattening of demand charging would create fairer pricing for consumers.
While both of the charging methods proposed by Project TransmiT’s technical working group have their merits, we favour the Improved Long Run Incremental Cost Model as it encourages generators to be as efficient as possible in siting projects.
Other technical developments suggest that the balance of where the charges fall should move more towards demand than generation. Ultimately, it is the customer who pays regardless of where the industry charge is applied and it makes sense to harmonise with Europe on this issue so that there is no discrimination on cross-border trade.
We believe the principle of paying embedded generators the reverse of the demand TNUoS is still justified because local generation avoids the use of the transmission network.
timescales
To provide both generators and consumers with clarity on charging, we believe it is important that the final changes are announced by April 2012 with implementation between 2014 -2015.
This would provide enough time for investment decisions to be planned and would also be in line with EMR. A more aggressive implementation timetable could ultimately lead to a gap in capacity as ageing plant is switched off sooner than expected, resulting in higher energy costs for consumers.
smart grids
Smart grids present an opportunity to introduce more sophisticated charging across both transmission and distribution networks but until these start to be established we believe the current arrangements should continue.
Given the time it will take for the level of embedded generation to change significantly - and the planning required for the charging structures needed to reflect smart grids - we believe that the current embedded arrangements should stay in place for the next 10 years (or until the next review of the Transmission Arrangements) to encourage as much distributed generation as possible.
Increasing connections must be a priority and efforts should be made to locate new plant on or near sites of decommissioned plants where possible. Locating plant on brown field sites would enable existing infrastructure to be used.
For additional information, please contact us.
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