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New transmission charge forecast will help generators managing cost uncertainty and volatility

Robert Buckley Robert Buckley Head of Relationship Development
17th February 2021

Transmission network use of system (TNUoS) charges represent a significant proportion of operating costs for many renewables generators, often exceeding 50% of annual running costs. For some, as recently highlighted by SSE in a recent report and to Members of the Scottish Parliament, they could present a barrier to investment in generation in some areas.

TNUoS charges recover the majority of the transmission network costs according to price control agreed with Ofgem. Large generators (those connected to the transmission system or the distribution system with a Bilateral Embedded Generation Agreement (BEGA), typically above 100MW) pay TNUoS in respect of their Transmission Entry Capacity (TEC) – the maximum amount of power they can flow onto the transmission system. TNUoS costs for generators aim to give a locational signal.

A generator connecting a long distance from demand will require power to be transmitted over a long distance, which in the long-run will lead to a greater need for transmission investment and greater costs on the transmission network. The locational variation in transmission network charges has increased significantly over recent years and is now a material consideration in deciding where to site new plant, as SSE has highlighted. Moreover, the UK Government’s recent commitments to 40GW of offshore wind by 2030 and bringing new nuclear to financial close will lead to major shifts in the way the transmission network is developed over the coming decades.

Cornwall Insight’s Transmission Network Use of System (TNUoS) report uses the latest announcements on development of new plant, and our well-informed view on longer-term developments, to give a credible 15-year forecast of TNUoS charges. It draws out how locational charges could change over a 15-year time horizon, to support developers in their decision making on generation.

The key components of the forecast are:

  • Long-term 15-year forecasts[CN1]: The report provides a long-term independent view beyond the typical National Grid 5-year forecast horizon, supporting investment decisions and analysis.
  • Incorporating key regulatory change: Our independent modelling and subject matter expertise across network charging allows us to forecast and quantify the impacts of key regulatory changes and modifications impacting future TNUoS rates.
  • Data tool and specific analysis: An easy to use tool, allowing you to assess TNUoS costs across different zones and technologies. Our accompanying report provides key insights into the changes and drivers behind costs.

To find out more about the report, please contact James Brabben on j.brabben@cornwall-insight.com or on +44 (0) 1603 542141.