1. Place your chosen image here. The four corners must just cover the arrow tips. For covers, the three pictures should be the same size and in a straight line. Update on Review of Embedded Generation Benefits Andy Wainwright

2. 2 Background  Standard Licence Condition C13  Introduced at BETTA (2005)  Addressed different treatment of 132kV connected small generation in Scotland (transmission) with that in England and Wales (embedded)  Time limited: due to expire 1 st April 2016  Embedded review needs to consider overall implications on GB generation  Informal industry focus group established Spring 2013

3. 3 Objectives of transmission charges  Cost reflectivity  Facilitate competition  Developments in transmission businesses  Recover transmission costs  Non-discrimination Affected transmission ‘charges’ TNUoS BSUoS Losses Focus Group agreement to consider TNUoS first

4. 4 TNUoS Charges - Locational Element TNUoS Locational Elements only Charging Zones Tariffs  Net approach  Embedded generation nets with demand  Therefore subject to a negative demand locational signal  Based on output at Triad  Equivalent to generation signal: zoning limitations  Gross approach  Embedded generation receives same generation signal as transmission connected  All demand receives locational signal

5. 5 The effect of the generation residual element -10 -5 0 5 10 15 20 25 30 ABCDE Gen Dmd Avoidance of generation residual charge  Embedded generator avoids paying generation residual element

6. 6 The effect of the demand residual element -10 -5 0 5 10 15 20 25 30 ABCDE Gen Dmd Netting of positive demand  Positive demand can avoid paying the demand residual element if able to net with embedded generation  Embedded generation therefore has a value equal to the demand residual element

7. 7 Combination of both residual elements  In summary, embedded generation can receive TNUoS ‘benefit’ through two effects on residual elements;  netting of positive demand (i.e. reducing demand charge)  avoidance of generation residual charge Avoidance of generation residual charge Netting of positive demand 2 x Residual uplift

8. 8 YearCostResidual 2012/13£1.41/kW£27.07/kW 2009/10£1.30/kW (equates to £1.47/kW in 2012/13) 1 £20.74/kW (equates to £23.53/kW in 2012/13) 1 1 RPI factor for 2009/10 to 2012/13 = 1.132992 How much benefit should be paid for offsetting +ve demand? NGET GSP infrastructure reinforcement costs

9. 9 Average TNUoS charge: £7.57/kW (2013/14) Transmission Function (Use)Transmission connected G Embedded G Net transfers inject Net Access to Market (s) GB & wider EU Security / Quality of Supply Should embedded generation pay for transmission? How does embedded generation use transmission? Comparing transmission and distribution charges Note 2013/14 average TNUoS charge: £7.75/kW

10. 10 Other areas under consideration Impact on >100MW generatorsExporting GSPsOffshore Transmission Implications

11. 11 Next steps  National Grid report to be published October  Include Focus group & bi-lateral discussions  Three week open letter  Formal CUSC modification proposal potentially later in Autumn