1. LRIC Charging with a Fixed Reinforcement Period for Different Growth Rate Furong Li University of Bath

2. Overview Issues with LRIC with different growth rates – lower growth rates tend to have higher charges when the circuit utilisation is close to its rated capacity LRIC with a fixed time horizon

3. Key Issue 45MW rating £3,193,400 asset cost 6.9% discount rate 1MW increment

4. LRIC Pricing Model Translate each circuit’s spare capacity into the time horizon to reinforcement at underlying load growth Transfer the spare capacity into present value of reinforcement Cost of reinforcement will be a function of asset cost and circuit utilisation Marginal pricing signal from increase in PV of future reinforcement as the result of an injection of load or generation + 1 MW After Before

5. LRIC 1.6% growth rate at 2% circuit utilisation: 5% growth rate at 2% circuit utilisation: Present 78 yrs (reinforcement) FC 240 = £3,193,400 PV = £0.36 PV = £17538 240 yrs (reinforcement) FC 78 = £3,193,400 45MW rating £3,193,400 asset cost 6.9% discount rate 1MW increment

8. LRIC Util=100%Util int =50% Util=100% Util int =50% Util=100% Once a circuit reaches its full capacity, an additional circuit will be added, the circuits utilisation would drop to 50%. The time take (T) for the circuits to grow from 50% to 100%: at 1.6% circuit growth rate T=44yr at 5% circuit growth rate T=14 yrs

12. Conclusions LRIC considering one rather than a stream of future reinforcement introduces some distortion to the network cost The distortion is negligible for circuits with low load growth rates For high load growth rates at high circuit utilisation, the distortion can be significantly reduced by considering a few more future reinforcement