1. energynetworks.org 1 PRESENTED BY MARÍA ISABEL LIENDO, SCOTTISH POWER, ON BEHALF OF WORKSTREAM 2 Cost and Benefit allocation to DG under the CDCM 11 December 2008

2. energynetworks.org 2 Background One of the main drives for the SoC project is to develop cost-reflective charges which recognise the benefits that DG bring to the network. Ofgem’s Appendix 2 guidelines: implementation HV/LV: Assignation of F-factors DG yardsticks Interaction with EHV charging

3. energynetworks.org 3 Assignation of “F” factors Depends on type of generation: intermittent or non- intermittent For non-intermittent generation, F-factor depends on the number of units For intermittent generation, F-factor depends on the “persistence” time (the period of continuous generation assumed to be needed for system security). ER P2/6 identifies 5 types of non-intermittent generation and 2 types of intermittent generation. Tariff per voltage level  need for a balance between simplicity and cost reflectivity.

4. energynetworks.org 4 F-factors, non-intermittent generation WS2 initial proposals for non-intermittent generation Group non-CHP generators and assign F-factor of CCGT CHP generators assigned F-factors of gas turbine CHP

5. energynetworks.org 5 F-factors, intermittent generation WS2 initial proposals for intermittent generation P2/6 demand group thresholds are ignored (para 1.55) Persistence value equivalent to “switching” (3 hours) Tidal, wave, photovoltaic… (?)

6. energynetworks.org 6 DG yardsticks Under this proposal, generation is considered to offset demand and provide benefits by deferring reinforcements at higher voltage levels Does this apply at the voltage of connection too?

7. energynetworks.org 7 Consideration to be given to: F-factors. Right balance simplicity (number of tariffs) vs cost- reflectivity? Should the group consider fuel type instead of technology (for non-intermittent generators)? Is the grouping of the technologies correct? For the DG yardsticks, should the benefits at the level of connection be considered too?

8. energynetworks.org 8 Interaction with EHV charging Application of ER P2/6 at EHV and HV/LV for pricing is different. For EHV, Ofgem’s guidelines specify that “the level of demand expected to contribute to network security as set out in ER P2/6”. For generators in a Demand Group > 12 MW there is no benefit, as no contribution to system security Persistence factor assumed greater than “pricing” assumptions for HV/LV. Whereas for HV/LV, Ofgem’s guidelines specify that any P2/6 thresholds should be ignored.

9. energynetworks.org 9 Is it acceptable to have potential cross-voltage pricing signals? Possible solutions Consideration to be given to: