Ofgem issues “minded to decision” document – “It’s TRIAD Jim, but not as we know it!”

Published on 10th March, 2017

With passing apologies to all Trekkies, there are various regulatory reviews currently underway with regard to the benefits currently payable to owners or operators of ’embedded’ generation assets. A generator is defined as ’embedded’ if it is below 100 MW capacity and is connected to the distribution network rather than the high voltage transmission grid.

One area of review continues to be focussed on the so called ‘TRIAD benefit’, and on the 1st March 2017 Ofgem published its ‘minded-to decision’ document which invites feedback from interested parties against a deadline of 10th April 2017, with a final decision being scheduled for May 2017.

A link to the full Ofgem document is provided here:

As the implications of this decision are so significant for embedded generators, we at EnDCo feel it is important that parties likely to be directly affected consider responding to the consultation.

The key features contained within the Ofgem ‘minded-to’ decision are:

  • That the Transmission Network Use of System (TNUoS) charges for demand and embedded generation will no longer be applied on a net basis i.e. after taking account of demand for electricity in each Grid Supply Point (GSP) group. Whereas under current arrangements, embedded generation is, in effect, treated as negative demand in each GSP group, under the proposed new arrangements, the volumes associated with embedded generation will be separated out and a different set of charges applied to demand and embedded generation.
  • The TNUoS demand residual, as applied to embedded generation, will be reduced to the value of the costs of avoided GSP reinforcement (last valued by National Grid at £1.62/kW).
  • The locational element of the TNUoS charge remains unchanged under the proposal.
  • The total TNUoS charge for embedded generation (the locational element plus the new value of the demand residual, as applied to embedded generation) will have a floor of zero. This means that embedded generation will receive either a credit or zero, but will not be required to pay a charge.
  • The change will be implemented in the charging year 2018-19 and phased in over a three year period.
  • There is no provision for grandfathering arrangements within the proposed solution.

The current TNUoS tariffs are between £30/kW and £55/kW, and the proposed changes mean these are forecast to eventually end up at between £0/kW and £10/kW.

As things stand, this Ofgem ‘minded-to decision’ is likely to be implemented unless strong arguments can be found against it and will result in a significant reduction in available revenues for embedded generators from Winter 18/19 – in most geographical areas this is forecast to result in the TRIAD benefit reducing to zero by Winter 20/21.

A number of industry trade associations have already issued comment regarding these plans and we would recommend that anyone likely to be affected by these proposed changes give serious thought as to how it wishes to respond to this matter.

For further information, please email me at: les.abbie@endco.co.uk

Les Abbie, CEO, EnDCo