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Electricity non-commodity costs, also known as Third Party Charges (or TPCs), are faced by the vast majority of end consumers that use electricity. They represent a significant proportion of the energy bill for domestic, SME and large industrial user types; however, their applicability and scale can vary depending on the...
Last year, we partnered together with Wind Energy Ireland (WEI) to produce a report titled “Improving Revenue Certainty and Risk Allocation for New Renewable Generators”, which explored potential auction policy changes for the RESS auction that would help de-risk renewable investment for developers and generators. At the heart of this...
Some of our team have looked back throughout 2022 and picked their most exciting ‘Chart of the Week’. Their choices include exploring green tariffs, wholesale gas prices, CfD allocation round 4 and the MHHS Implementation Levy. It’s My Birthday – Two years of Dynamic Containment Picked by Tom Faulkner, Head...
Concerns that the strike prices in the upcoming CFD auction round could be too low to be deliverable have been raised as more details of the scheme have emerged. Back in May 2022, our chief executive Gareth Miller discussed why such fears may have some grounding. Last week I was...
Against the backdrop of record high and volatile energy prices, Ofgem set out on 8 July its view on key aspects of the GB energy system where it considers significant reform is required to deliver a resilient, low cost, low carbon energy sector. Recent developments in the energy market, such...
Energy storage and flexibility
In a world of open governance code modifications, change is a constant. You only have to look at the number of code modifications ongoing at any one time – National Grid lists 36 modifications in development relating to transmission network charging alone – for evidence of that. But in recent...
Energy storage and flexibility
The electricity network charging landscape is complex and ever-changing. We discuss recent implemented reforms and changes we expect to see.
CMP308 will be implemented on 1 April 2023 and, while an Ofgem decision is still awaited on the proposal to make BSUoS a fixed volumetric charge, transmission-connected generators now have clarity that they will no longer be liable for BSUoS costs from this date.
In recent months, the GB energy market has been exposed to extreme volatility as wholesale prices have grown rapidly, leading to a significant number of supplier exits and questions over consumer affordability of energy bills. This has resulted in notable movement across a number of non-commodity costs (also known as...
The extraordinary developments that have occurred in the energy sector in recent months have led to a tumultuous time for all participants. We have taken a look back through our archives to where we highlighted our concerns a number of years ago that this outcome was, unfortunately, a real possibility. This...
Following the end of the transition period on 31 December 2020 and the signing of the Trade and Cooperation Agreement, aspects of the relationship between UK and the EU in respect of the arrangements for energy trading and cooperation have changed. We set out answers to some Frequently Asked Questions...
The COVID-19 crisis forced many bodies and companies to change their priorities and caused major wholesale price changes. With another national lockdown announced this week, the pandemic is certain to remain a significant factor this year.
The lower demand and action to curtail high renewables output, with solar and wind hitting record levels, led to a sharp rise in Balancing Services Use of System (BSUoS) costs
Whilst this is an extreme example of the impacts of weather correlated pricing events, it does highlight how wider factors in Europe can have a material impact on GB wholesale price formation.
However, due to the scale and length of the impacts resulting from the COVID-19 outbreak, and the industry’s various methods of cost recovery, the effects on TPCs are likely to be felt for many years to come.
Energy storage and flexibility
Suppliers have many balls to juggle, but the regulator is cementing its position that it cares most about how customers are treated.
With increased BSUoS costs coming at a time of difficulty for the market, the deferment of additional BSUoS costs would be a welcome relief to suppliers and transmission connected generators alike.
Ofgem is still considering UNC721 and UNC725, that would enable shippers to update closed sites’ consumption volumes (Annual Quantity and Supply Offtake Quantity) more frequently, and which would see reductions in energy allocation and transportation charges where the customers have reduced or discontinued activities.
Energy storage and flexibility
This week National Grid Electricity System Operator (“the ESO”) released its latest forecast of Balancing Services Use of System (BSUoS) charges – levied on suppliers and large generators to recover costs incurred by the ESO in managing the system on a second by second basis. In this blog we look...
Ofgem’s Targeted Charging Review (TCR) has been a major workstream in the electricity industry since it was kicked off in March 2017. Looking at several elements of the network charging regime that were deemed no longer fit for purpose in the changing energy system, it has wound its way towards...
This article was originally published on 6 April 2020 in Energy Spectrum Issue 709.
Energy storage and flexibility
It will be a little while yet before we see true parity between storage and generation, but the direction of travel is clear.
Our own long-term power market model, utilised to produce our Benchmark Power Curve, incorporates net zero scenarios and shows that onshore wind capacity is likely needed to be 16.0GW to 22.0GW by 2030 to ensure we are on a pathway to meet net zero targets. For solar PV, the level...
Energy storage and flexibility
The return of the Capacity Market (CM) after its legal hiatus in November 2019 was a relief to many owners and developers of generating capacity in GB. But I think it’s time to ask whether it’s really the best tool to reach net zero at lowest costs to consumers. The...
The TCR is just one element of a package of major reforms which are underway. It is, in theory, complemented by the Network Access and Forward-Looking Charges SCR (the “Access SCR”). Both are looking at Distribution and Transmission Use of System (DUoS and TNUoS) charges and both have wide-ranging implications.
This factsheet summarises the key changes which will be implemented following Ofgem’s decision on the TCR, noting that Forward Looking Charges are also under review under the Network Access and Forward Looking Charges SCR.
Under subsidy schemes, there is also a pipeline of over 800MW of Remote Island Wind (RIW) projects looking to develop in the Scottish Isles under the Contracts for Difference (CfD) scheme.
The strong support for the BSUoS task force conclusions in the short consultation on its draft findings gives weight to the charge continuing to be treated as a cost recovery charge, rather than a forward-looking charge that users can reasonably respond to.
In this week’s Energy Perspective, we set out the main developments in the GB Capacity Market since the November 2018 ruling by the European Court of Justice that led to its suspension including, most recently, the European Commission’s confirmation it is to undertake a full investigation into the scheme.
We present five key themes and findings from this week’s edition of Energy Spectrum issue 652
