Electricity Market Reform

Transcription

1 Electricity Market Reform 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. John Perkins, Feed in Tariff Design Manager

2 Agenda Role of the Delivery Body Analytical work to support Strike Price setting CfD Allocation 2

3 EMR Delivery Body What National Grid will do. Provide analysis and modelling information Develop scenarios Assess eligibility for contracts Allocate CfD contracts Run capacity auctions Administer capacity contracts Report progress against expected outcomes

4 What National Grid will not do Set energy policy Set CfD Strike prices Be the contractual counterparty to the CfD contracts Set the security of supply standard Use information gained as a result of the EMR role for any purpose other than EMR

5 To deliver EMR, National Grid s modelling will need to be able to address a series of questions A) LC Generation Build B) Market Interest C) Capacity Adequacy D) System Operation E) Cost of System Operation F) Networks Objective 1 Decarbonising the UK Ensuring progress towards CO 2 targets Objective 2 Keeping the lights on Ensuring security of supply Objective 3 Keeping it affordable Minimising the impact on customer bills and adhering to Levy Control Framework Q1: What is the cost outlook by LC technology? Q2: What is the FiT with CfD requirement to make LC build viable? Q3: How much new LC capacity will be built for each FiT with CfD scenario? Q4: How much capacity will need to be sourced for each LC build scenario? Q5: What capacity payments will be needed to ensure adequate new non-lc capacity built? Q6: How will capacity markets impact power market prices? Q7: Will the sourced capacity be adequate to balance the system? Q8: What is the cost of system balancing (e.g., reserve / response requirements)? Q9: What will the impact of FiT with CfD and capacity payments be on end-user prices and the Levy Control Framework? Q10: Will the networks (T&D) be constrained for different build out scenarios and how the constraints should be resolved? 5 Q11: What network investments will be needed for each build out scenario taking into account trade-offs with BM costs?

6 We aim to address these questions through five modules Demand module LC generation build module Strike price scenarios Build out potential Market interest Q3 Q1 Q2 Energy & Capacity module Capacity adequacy model Capacity market interest model Q4 Q5 Energy market model Q6 System operation model Q7 Q8 Networks module Network modelling Tx & Dx Q10 Key outputs module Customer bill impact Q9 Q11 Progress towards CO2 target Security of supply position + operability of network 6

7 NG Call For Evidence Qualitative economic factors (comparison to RO) Quantitative - renewable technology costs Onshore wind Qualitative Quantitative Offshore wind Biomass Tidal Stream Wave 2 ACT Hydro >5MW (with Storage) Other

8 Timeline Panel Technical Experts (PTE) Appointed NG Final Analysis to DECC (~25 scenarios) NG Report to DECC Final Delivery Plan Feb March April May June July Dec NG CfE Report to DECC Updated assumptions from DECC (inc demands, levelised costs, fuel prices) PTE Report to DECC Draft Delivery Plan

9 Go Live - Summer 2014 Routes to a CfD Secretary of State issued Investment instrument Contracts transferred to the CfD counterparty Secretary of State negotiation for certain projects Delivery Body (NG) through generic process

10 Application for a CfD Target Commissioning Date and Size (MW) Within DECC 5 yr delivery plan period Eligibility Criteria Planning Permission Signed Grid Connection Agreement Not accredited under RO (full Biomass conversion is the exception) No Capacity Mechanism Contract Not eligible for small scale FiT

11 Delivery Body CfD Allocation Cost Control through Levy Control Framework (LCF) funding for low carbon electricity Initial (unconstrained) allocations using administered strike prices Transition to allocation rounds with objective methods to distinguish between projects applied as budgets become constrained Further detail alongside Draft Delivery Plan (July) and Draft Secondary Legislation (Autumn)