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Energy: Net zero

Energy: Net zero | 30

Some choices in transmission access

Josephine Lord Consultant

Several jurisdictions around the world have put in place transmission access arrangements that include locational pricing and Financial Transmission Rights (FTRs). This month we look at the reforms to the transmission access arrangements that are currently being taken forward in Australia and those that have been operating in New Zealand for a few years. We consider their relevance to the approach currently adopted in the UK and to the reforms being considered here. Australia Central to the arrangements being developed for Australia’s National Electricity Market (NEM) are locational marginal prices (LMPs) for power. These are intended to better incentivise generators to factor transmission constraints into where they locate. FTRs also give generators a risk management tool to protect them against constraints and transmission losses. The grid access reforms are a part of wider work to develop a post 2025 market design that also includes changes to better coordinate generation and transmission network investment. However, they are fundamental to better integrating new technologies into the national grid in a way that is cheaper, faster, and fairer across the board. The design is currently being refined with the aim of having draft rule changes ready in December. The proposed changes are set against a rapidly changing generation background. As most of the existing generation stock approaches retirement, the new generation connecting is wind and solar that is locating in places that do not have sufficient network capacity, creating transmission constraints. This has become a bigger problem over the last couple of ...

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