Forecast from 2016-17 to 2019-20
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Tariff Information Paper Forecast TNUoS tariffs from 2016/17 to 2019/20 This information paper provides a forecast of Transmission Network Use of System (TNUoS) tariffs from 2016/17 to 2019/20. These tariffs apply to generators and suppliers. This annual publication is intended to show how tariffs may evolve over the next five years. The forecast tariffs for 2016/17 will be refined throughout the year. 28 January 2015 Version 1.0 1 Contents 1. Executive Summary....................................................................................4 2. Five Year Tariff Forecast Tables ...............................................................5 2.1 Generation Tariffs ................................................................................. 5 2.2 Onshore Local Circuit Tariffs ..............................................................10 2.3 Onshore Local Substation Tariffs .......................................................12 Any Questions? 2.4 Offshore Local Tariffs .........................................................................12 2.5 Demand Tariffs ...................................................................................13 Contact: 3. Key Drivers for Tariff Changes................................................................14 Mary Owen 3.1 CMP213 (Project TransmiT)...............................................................14 Stuart Boyle 3.2 HVDC Circuits.....................................................................................14 3.3 Contracted Generation .......................................................................15 3.4 Generation/Demand Revenue Proportions ........................................15 3.5 Transmission Owners’ Revenue.........................................................16 3.6 Demand Forecasts .............................................................................17 mary.owen@nationalgrid. 3.7 Other model inputs .............................................................................18 com 4. Commentary on Forecast Generation Tariffs ........................................21 stuart.boyle@nationalgrid 4.1 Wider Zonal Generation Tariffs...........................................................21 .com 4.2 Changes in the Generator Residual ...................................................23 4.3 Onshore Local Circuit Tariffs ..............................................................23 4.4 Onshore Local Substation Tariffs .......................................................24 4.5 Small Generators Discount.................................................................24 Mary: 01926 653845 5. Commentary on Forecast Demand Tariffs .............................................25 Stuart: 01926 655588 5.2 Half-Hourly Demand Tariffs (£/kW).....................................................25 Team: 01926 654633 5.3 Non Half-Hourly Demand Tariffs (p/kWh)...........................................26 5.4 Residual Demand Changes................................................................27 5.5 Locational Demand Changes .............................................................27 6. Generation and Demand Revenue Proportions.....................................28 7. Generation and Demand Residuals ........................................................29 7.1 Effect of Changing Demand Charging Bases.....................................30 8. Tools and Supporting Information..........................................................31 8.1 Discussing Tariff Changes..................................................................31 8.2 Future Updates to Tariff Forecasts.....................................................31 8.3 Charging Models.................................................................................31 8.4 Tools and Useful Guides ....................................................................31 9. Comments & Feedback ............................................................................32 2 Appendix A : Treatment of HVDC Links.......................................................34 Appendix B : TNUoS Tariffs without HVDC Links.......................................36 Appendix C : Revenue Analysis....................................................................40 Appendix D : Contracted Generation Changes from 16/17 to 19/20 .........45 Appendix E : Zonal Summaries of Modelled Demand................................51 Appendix F : Generation Zone Map..............................................................52 Appendix G : Demand Zone Map .................................................................53 Disclaimer This report is published without prejudice and whilst every effort has been made to ensure the accuracy of the information, it is subject to several estimations and forecasts and may not bear relation to either the indicative or actual tariffs National Grid will publish at later dates. 3 1. Executive Summary This document contains our forecast of how Transmission Network Use of System (TNUoS) tariffs will change between 2016/17 and 2019/20. TNUoS is paid by generators and suppliers for use of the GB electricity transmission networks. Tariffs for 2015/16 were discussed in more detail in December’s Draft TNUoS tariffs for 2015/16 and will be finalised at the end of January 20151. We will update the Tariffs for 2016/17 over the next year and finalise them in January 2016. For charging years 2016/17 onwards, we are using the methodology associated with Working-group Alternative Code Modification 2 of CUSC Modification Proposal CMP213 (Project Transmit) which was approved by Ofgem in July 2014. Forecasts take into account changes in: Generation and Demand connected to the transmission system; the transmission network due to investments undertaken by transmission owners (TOs); and TO revenues. TO revenues include a forecast of inflation, changes to onshore TO allowed revenue under RIIO price controls and a forecast of offshore transmission owners’ revenue. An EU regulation limits the average annual use of system charges that generators pay to €2.5/MWh for the foreseeable future. With rising revenues this limit is reached in 2015/16 and consequently the revenue recovered from generation is capped and variations in allowed revenue are only reflected in demand tariffs. The generation cap includes revenue from offshore generators which increases with more offshore transmission networks and this, combined with an increase in contracted generation, reduces the generation residual meaning that average Generation tariffs decrease year on year. There are locational variances in Generation and Demand tariffs in 2017/18 due to the Western HVDC link which for the purposes of this report is assumed to commission in mid-2017. This link between Hunterston in Western Scotland and Deeside in North Wales is being built to facilitate the delivery of renewable energy between Scotland and England & Wales. The HVDC link generally increases Generation tariffs in the North and decreases Generation tariffs in the South, with the opposite effect on Demand tariffs. In 2018/19, the Caithness-Moray HVDC link is planned to commission and new offshore wind farms in Scotland increase North to South flows. This generally increases Generation tariffs in the North and decreases Generation tariffs in the South, with the opposite effect on Demand tariffs. Certain zones do reverse this trend where large scale Generation projects connect. 1http://www2.nationalgrid.com/UK/Industry-information/System-charges/Electricity-transmission/Approval-conditions/Condition-5/ 4 2. Five Year Tariff Forecast Tables This section contains the Generation and Demand Tariffs for 2016/17 to 2019/20 using the Diversity 1 methodology which forms part of CMP213 Working-group Alternative Code Modification proposal 2. The proportion of revenue recovered from Generation and Demand is altered each year to limit the average generation charge to €2.5/MWh. 2.1 Generation Tariffs Under the approved CMP213 Diversity 1 methodology the tariff paid by a generator depends on: the zone into which the generator connects, whether the generator is conventional or intermittent, and the generator’s specific annual load factor. The tariff is built up from four elements as follows: System Peak:Payable by conventional generators only Shared Year Round: Payable by all generators, scaled by each generator’s specific annual load factor Not Shared Year Round: Payable by all generators. (Use £0/kW where no tariff is shown in the tables.) Residual: Payable by all generators. To illustrate the combined effect of these elements we include examples of the tariff that would be paid by: A conventional generator with an annual load factor of 70% An intermittent generator with an annual load factor of 30%. 5 Table 1 - 2016/17 Generation Tariffs Not Shared System Shared Conventional Intermittent Year Residual Generation Tariffs Peak Year 70% Load 30% Load Round Tariff Tariff Round Factor Factor Tariff Tariff Zone Zone Name (£/kW) (£/kW) (£/kW) (£/kW) (£/kW) (£/kW) 1 North Scotland 2.84 13.26 7.19 1.31 20.63 12.48 2 East Aberdeenshire 3.71 6.84 7.19 1.31 17.00 10.56 3 Western Highlands 2.60 11.21 6.90 1.31 18.66 11.57 4 Skye and Lochalsh -1.43 11.21 8.37 1.31 16.10 13.04 5 Eastern Grampian and Tayside 2.20 10.11 6.39 1.31 16.98 10.74 6 Central Grampian 4.05 10.03 6.33 1.31 18.71 10.65 7 Argyll 3.07 7.95 9.78 1.31 19.73 13.47 8 The Trossachs 3.19 7.95 4.77 1.31 14.84 8.47 9 Stirlingshire and Fife 3.65 7.03 4.43 1.31 14.31 7.85 10 South West Scotland 2.01 7.41 4.43 1.31 12.94 7.97