1. Generation Dominated Areas Oliver Day 5 April 2012 1 | Energy Networks Association - DCMF

2. Generation Dominated Areas MIG workgroup set up to explore three ‘charging’ options for HV connected generators and submit a DCUSA change proposal Workgroup picks up from the work previously undertaken by Frontier Economics Five meetings have taken place Group have: Establish a revised GDA specification Developed a GDA identification template Started to analyse results based on latest LTDS Started to draft ‘final’ report 5 April 2012 2 | Energy Networks Association - DCMF

3. Test for GDA GDA is defined as “a primary substation where thermal reinforcement is more likely to be caused by generation than demand, within a specific time period” GDA test uses a variation of the test developed by Frontier Economics and uses LTDS data on primary substations A second test has been added to ensure a ‘charge’ signal is not removed where a generator is supporting a demand loaded substation The second test validates whether generation loading is higher than the demand loading Both tests are conducted over 2.5 year, 5 year, 7.5 year and 10 year time horizons 5 April 2012 3 | Energy Networks Association - DCMF

4. First test Substation Firm Capacity (summer) = Firm capacity x Summer weighting Gen Cap t = Estimated generation capacity in year t Min Demand t = Estimated minimum demand in year t 5 April 2012 4 | Energy Networks Association - DCMF Substation Firm Capacity (summer) < Gen Cap t – Min Demand t Test considers the net of generation and min demand growth and asks will it exceed the substation firm capacity in a given year? Is generation driving reinforcement?

5. Second test Max Demand t = Estimated max demand in year t Min Generation t = Estimated min generation capacity in year t 5 April 2012 5 | Energy Networks Association - DCMF Gen Cap t – Min Demand t > Max Demand t – Min Generation t Test considers the generation and min demand growth and asks will it exceed the max demand and min generation growth in a given year? Is demand still a factor in the need to reinforce?

6. Charging Options 5 April 2012 6 | Energy Networks Association - DCMF Workgroup explored three charging options Option 1: The introduction of a very simple locationally varying charging regime for HV generation Option 2: The introduction of a simple regime for levying credits on HV generation Option 3: To amend the existing charging regime so that credits are removed from HV generation in locations that are considered to be generator dominated

7. Option 1 5 April 2012 7 | Energy Networks Association - DCMF Simple locational varyingMirrors existing HV structures Eight sets of charge Four x Intermittent Four x Non-intermittent ‘Norm’ – Full Credit – 10 years to GDA ‘Low’ – 67% Credit – 7.5 years to GDA ‘Med’ – 33% Credit – 5 years to GDA ‘High’ – No Credit – 2.5 years to GDA 1 2 3 4 Each primary substation given generation dominance ‘rating’ Each HV generator assigned to a primary substation

8. Option 2 5 April 2012 8 | Energy Networks Association - DCMF Simple credit regimeExisting HV structures Two sets of charge Intermittent x factor Non-intermittent x factor 1 2 DNO area adjustment based on GDA in 5 years Capacity of GDA substations Total capacity

9. Option 3 5 April 2012 9 | Energy Networks Association - DCMF Remove credits from GDAMirrors existing HV structures Four sets of charge Intermittent GDA – no credit Intermittent ‘norm’ – full credit Non-intermittent GDA – no credit Non-intermittent ‘norm’ – full credit 1 2 3 4 Each primary substation given generation dominance ‘rating’ if GDA in 7.5 years Each HV generator assigned to a primary substation

10. Option variants Many variants of the options considered Workgroup trying to balance cost reflectivity with sensible and transparent application Other variants include: % reduction in credit only to apply to network level of generation dominance i.e. Primary substation Credit remains for those sites with Generation Side Management (GSM) agreements 5 April 2012 10 | Energy Networks Association - DCMF No variant ruled out – desire for pragmatic approach

11. Option preference Workgroup evaluated options based on charging principles Option 1 provided most pragmatic approach when GDA identified Option 2 would reduce credits at locations where generation support was most needed Option 3 would cause most potential for volatility if substations flipped one year to next Workgroup preferred to provide a granular price signal 5 April 2012 11 | Energy Networks Association - DCMF Current preference to recommend option 1

12. Initial analysis 5 April 2012 12 | Energy Networks Association - DCMF *Based on previous LTDS data used for Frontier analysis

13. Initial impact 5 April 2012 13 | Energy Networks Association - DCMF *Based on previous LTDS data used for Frontier analysis – sample from 1 DNO group

14. Next Steps DNOs currently populating GDA template based on latest LTDS data Workgroup drafting report for MIG with recommendation and DCUSA change proposal Aiming to deliver report to MIG for 19 April 5 April 2012 14 | Energy Networks Association - DCMF