DOCSLIB.ORG

Customer-Led Network Revolution Commercial Arrangements Study Review of Existing Commercial Arrangements and Emerging Best Practice

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Customer-Led Network Revolution Commercial Arrangements Study Review of Existing Commercial Arrangements and Emerging Best Practice Customer-Led Network Revolution Commercial Arrangements Study Review of existing commercial arrangements and emerging best practice Document No: CLNR-L032 Authors: Celine Cluzel Element Energy Eleanor Standen Element Energy Issue Date: 13th June 2013 Copyright Northern Powergrid (Northeast) Limited, Northern Powergrid (Yorkshire) Plc, Durham University, 2013 Contents 1 Introduction ................................................................................................................. 1 2 Overview of the UK electricity market .......................................................................... 4 2.1 Generation and national interconnection ............................................................... 4 2.2 Transmission and system operation ........................................................................ 7 2.3 Distribution ............................................................................................................ 10 2.4 Supply ..................................................................................................................... 12 2.5 Current and future demand ................................................................................... 13 3 Description of the legislative and regulatory framework ............................................ 15 3.1 Electricity market codes ......................................................................................... 15 3.2 Contractual agreements ......................................................................................... 17 3.3 Connection and distribution use of system charging methodologies ................... 18 3.3.1 Suppliers’ charges .......................................................................................... 22 3.3.2 Distributed generators’ charges and payments ............................................ 23 3.3.3 Embedded network charges .......................................................................... 25 3.3.4 Illustrative network charges .......................................................................... 25 3.4 Other charges ......................................................................................................... 26 3.4.1 Transmission Network Use of System charges .............................................. 26 3.4.2 Balancing Services Use of System charges .................................................... 27 3.5 The price control regime ........................................................................................ 27 3.5.1 Distribution Price Control Review 5 .............................................................. 27 3.5.2 RIIO-ED1 ........................................................................................................ 28 4 Detailed analysis of current commercial arrangements .............................................. 30 4.1 Large generators .................................................................................................... 30 4.1.1 The wholesale market ................................................................................... 33 4.1.2 Direct contracts with third-parties ................................................................ 34 4.2 Distributed generators ........................................................................................... 36 4.2.1 Incentives and embedded benefits ............................................................... 36 4.2.2 Detailed analysis of current connection agreements and connection charging principles ...................................................................................................... 38 4.2.3 Impact of distributed generation on network operation .............................. 41 4.3 Suppliers and end-users ......................................................................................... 43 4.3.1 Commercial models by customer sector ....................................................... 44 4.3.2 Incentives for suppliers and end-users ......................................................... 45 4.4 The relationship between DNOs and domestic electricity consumers .................. 46 4.5 Balancing services .................................................................................................. 47 5 Identification of successful models and barriers in current market arrangements ...... 49 5.1 Influencing customers’ demand ............................................................................. 49 5.1.1 Existing models for load shifting ................................................................... 50 5.1.2 Barriers to demand side response ................................................................. 54 5.2 Integration of renewable generation ..................................................................... 62 5.2.1 Storage........................................................................................................... 62 5.2.2 More active role in system management & Distribution System Operator role ................................................................................................................ 64 5.3 Summary of barriers resulting from market arrangements................................... 65 6 Analysis of emerging commercial arrangements ........................................................ 67 6.1 Connection agreements ......................................................................................... 67 6.2 Electricity Market Reform ...................................................................................... 70 6.3 DNO perspective on smart meters – benefits and failures of current proposals .. 71 7 Review of international best practice ......................................................................... 74 7.1 Examples from Europe ........................................................................................... 74 7.2 DSM market and management of inflexible generation in the USA ...................... 77 7.3 Developing a market for DSR and embedded generation: the case of Australia .. 82 7.4 Learning opportunities for UK market ................................................................... 85 8 Summary and next steps ............................................................................................ 86 8.1 Overview of the UK electricity market ................................................................... 86 8.2 Key features of current arrangements ................................................................... 87 8.2.1 Regulatory framework for distribution network operators .......................... 87 8.2.2 Current commercial arrangements ............................................................... 90 8.3 Barriers in current arrangements and emerging arrangements ............................ 92 8.3.1 Existing models and barriers in current arrangements ................................. 92 8.3.2 Emerging commercial arrangements ............................................................ 95 8.4 Next steps ............................................................................................................... 96 9 Appendix ................................................................................................................... 98 9.1 DUoS tariffs and profile class ................................................................................. 98 9.2 DPCR5: incentives and obligations on DNOs ........................................................ 101 9.2.1 Climate change measures ........................................................................... 101 9.2.2 Improving customer service ........................................................................ 102 9.2.3 Efficient investment in networks................................................................. 104 9.3 Case Study: connection of a new embedded generator that requires reinforcement involving security and fault level CAFs .................................................. 105 9.4 DNO led DSR trials ................................................................................................ 107 Authors For comments or queries please contact: [email protected] 0330 119 0984 [email protected] 0122 385 2498 Reviewer Ian Walker, Director, Element Energy Acknowledgements The authors are grateful for the time several industry players have offered to answer our questions and discuss their views. They would like to especially thank Ofgem, Northern Powergrid, ENWL, Renewable UK, the Energy Network Association, RAP, Eurelectric and Andy Hadland from Energy Excel. Acronyms AEMC Australian energy market commission ANM Active network management AONB Areas of outstanding natural beauty BAU Business as usual BCA Bilateral connection agreement BM Balancing mechanism BMRS Balancing mechanism reporting system BSC Balancing and settlement code BSUoS Balancing Services Use of System CAF Cost apportionment factor CCCM Common connection charging methodology CCL Climate change levy CDCM Common distribution charging methodology/Model CERT Carbon emissions reduction target CHP Combined Heat and Power CLNR Customer-led network revolution CRC Charge restriction condition CUSC Connection and use of system code DC Distribution code DCUSA Distribution connection and use of system agreement DECC Department of energy and climate change DG Distributed generator / generation DNO Distribution network operator DPCR Distribution price control review DSM Demand side management DSR Demand side response
Load more

Recommended publications
  • Safer Together Energy UK Health & Safety Conference 2015
    Energy UK Health & Safety Conference 2015 Safer together Thursday 5 November Park Plaza Leeds, Boar Lane, City Square Leeds LS1 5NS #HSConf15 The voice of the energy industry Welcome Welcome to the Energy UK Health and Safety Conference We are grateful to our sponsors; ESB, Drax, Doosan, E.ON 2015 which brings together the various aspects of the energy and Scottish Power today, and our speakers for giving so industry to demonstrate how safety can be enhanced when freely of their time. Finally, thank you for being here - I hope we work together. you have a chance to network at the end of the day. Health and safety is more than an operational add-on in the The UK’s energy sector has a world-class record and leads in UK energy industry. It is at the heart of everything the industry building its safety culture into the fabric of the industry. Safety does: from the design stage, when the plans are still on the is designed into the physical build of our power stations - no drawing-board; through the day-to-day operation of all forms matter how large or small and irrespective of whether it is for of plant and station; to the supply of the gas and electricity gas, renewables or new nuclear. This makes Britain’s power that powers the lives and businesses of customers the length plants both resilient to their many operational challenges and and breadth of the country. a better, healthier place for staff to work. So, energy cannot afford to cut corners and must come at a But nothing stands still.
    [Show full text]
  • Investment Holdings As of June 30, 2019
    Investment Holdings As of June 30, 2019 Montana Board of Investments | Portfolio as of June 30, 2019 Transparency of the Montana Investment Holdings The Montana Board of Investment’s holdings file is a comprehensive listing of all manager funds, separately managed and commingled, and aggregated security positions. Securities are organized across common categories: Pension Pool, Asset Class, Manager Fund, Aggregated Individual Holdings, and Non-Pension Pools. Market values shown are in U.S. dollars. The market values shown in this document are for the individual investment holdings only and do not include any information on accounts for receivables or payables. Aggregated Individual Holdings represent securities held at our custodian bank and individual commingled accounts. The Investment Holdings Report is unaudited and may be subject to change. The audited Unified Investment Program Financial Statements, prepared on a June 30th fiscal year-end basis, will be made available once the Legislative Audit Division issues the Audit Opinion. Once issued, the Legislative Audit Division will have the Audit Opinion available online at https://www.leg.mt.gov/publications/audit/agency-search-report and the complete audited financial statements will also be available on the Board’s website http://investmentmt.com/AnnualReportsAudits. Additional information can be found at www.investmentmt.com Montana Board of Investments | Portfolio as of June 30, 2019 2 Table of Contents Consolidated Asset Pension Pool (CAPP) 4 CAPP - Domestic Equities 5 CAPP - International
    [Show full text]
  • European Energy Market Reform Country Profile: UK
    European energy market reform Country profile: UK To start a new section, hold down the apple+shift keys and click to release this object and type the section title in the box below. Contents Current situation 1 Energy consumption and trade balance 1 Power generation 2 Power market: main actors 3 Power prices 5 Targets for 2020 6 Energy efficiency targets 6 Renewable energy targets 8 CO2 emissions and targets 9 Road ahead and main challenges: the way to 2030 and beyond 11 Energy transition: pressure on electricity capacity 11 Fossil fuels 12 Renewable energy 13 GHG emissions 13 Conclusion 13 Selected bibliographic references 14 To start a new section, hold down the apple+shift keys and click to release this object and type the section title in the box below. Current situation Energy consumption and trade balance In 2012, the UK’s gross inland energy consumption1 amounted to 202 Mtoe. The UK relies heavily on fossil Key figures: fuels. Crude oil and gas represent 67% of its primary energy mix (35% and 32% respectively), with 86% Population (2013): 63.9 m cap. coming from fossil fuel sources. Primary energy consumption has decreased by 4% since 1990, and more rapidly GDP (2013): since then (-7% in 2011). 1,613 bn € GDP/capita (2013): 25,241 € Figure 1. Gross inland consumption in 2012 (202 Mtoe)2 Figure 2. Final energy consumption by sector (in Mtoe)3 GDP/PEC (2012): 7.7 €/kgoe 0% 1% 180 PEC/capita (2012): 2.75 toe/cap. 4% 160 153 Mtoe 1 9% 19% 140 137 Mtoe 19 134 Mtoe 1 1 17 120 17 37 100 35 26 80 53 32% Crude oil and gas 46 50 60 represent almost 35% 40 70% of the country’s primary energy 43 20 37 40 mix.
    [Show full text]
  • European Energy Market Reform Country Profile: UK
    European energy market reform Country profile: UK To start a new section, hold down the apple+shift keys and click to release this object and type the section title in the box below. Contents Current situation 1 Energy consumption and trade balance 1 Power generation 2 Power market: main actors 3 Power prices 5 Targets for 2020 6 Energy efficiency targets 6 Renewable energy targets 8 CO2 emissions and targets 9 Road ahead and main challenges: the way to 2030 and beyond 11 Energy transition: pressure on electricity capacity 11 Fossil fuels 12 Renewable energy 13 GHG emissions 13 Conclusion 13 Selected bibliographic references 14 To start a new section, hold down the apple+shift keys and click to release this object and type the section title in the box below. Current situation Energy consumption and trade balance In 2012, the UK’s gross inland energy consumption1 amounted to 202 Mtoe. The UK relies heavily on fossil Key figures: fuels. Crude oil and gas represent 67% of its primary energy mix (35% and 32% respectively), with 86% Population (2013): 63.9 m cap. coming from fossil fuel sources. Primary energy consumption has decreased by 4% since 1990, and more rapidly GDP (2013): since then (-7% in 2011). 1,613 bn € GDP/capita (2013): 25,241 € Figure 1. Gross inland consumption in 2012 (202 Mtoe)2 Figure 2. Final energy consumption by sector (in Mtoe)3 GDP/PEC (2012): 7.7 €/kgoe 0% 1% 180 PEC/capita (2012): 2.75 toe/cap. 4% 160 153 Mtoe 1 9% 19% 140 137 Mtoe 19 134 Mtoe 1 1 17 120 17 37 100 35 26 80 53 32% Crude oil and gas 46 50 60 represent almost 35% 40 70% of the country’s primary energy 43 20 37 40 mix.
    [Show full text]
  • Hydrogen in North-Western Europe a Vision Towards 2030 INTERNATIONAL ENERGY AGENCY
    Hydrogen in North-Western Europe A vision towards 2030 INTERNATIONAL ENERGY AGENCY The IEA examines the IEA member IEA association full spectrum countries: countries: of energy issues including oil, gas and Australia Brazil coal supply and Austria China demand, renewable Belgium India energy technologies, electricity markets, Canada Indonesia energy efficiency, Czech Republic Morocco access to energy, Denmark Singapore demand side Estonia South Africa management and Finland Thailand much more. Through France its work, the IEA Germany advocates policies that Greece will enhance the Hungary reliability, affordability Ireland and sustainability of Italy energy in its 30 member countries, Japan 8 association countries Korea and beyond. Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Please note that this Slovak Republic publication is subject to Spain specific restrictions that limit its use and distribution. The Sweden terms and conditions are Switzerland available online at Turkey www.iea.org/t&c/ United Kingdom United States This publication and any map included herein are The European without prejudice to the Commission also status of or sovereignty over participates in the any territory, to the delimitation of international work of the IEA frontiers and boundaries and to the name of any territory, city or area. Source: IEA. All rights reserved. International Energy Agency Website: www.iea.org CLINGENDAEL INTERNATIONAL ENERGY PROGRAMME CIEP contributes to the Clingendael public debate on International Energy international political Programme and economic The Hague, The developments in the Netherlands energy sector (oil, gas Website: and electricity) and https://www.clingendae energy-related climate lenergy.com/ change issues and energy transition. CIEP contributions include research, events, publications, comments, lectures and training.
    [Show full text]
  • View Annual Report
    ANNUAL REPORT 2014 Our energy in motion ELIA - ANNUAL REPORT 2014 ANNUAL REPORT ELIA - Summary 01 Executive report 01 — The system operator, a key player in the electrical system 02 — Challenges for a sustainable energy transition 04 — Letter from the Chairman1 06 — Letter from the CEO 08 — Key events in 20141 12 The Elia Group 12 — Playing a key role in a complex environment 14 — Two system operators, one European Group 16 — Dialogue with stakeholders 20 — Elia Group’s new strategy for creating added value 24 Challenges and prospects 24 — Prospects and challenges for 20151 26 — Guaranteeing reliable electricity transmission, both now and in the future 28 — Operating grid infrastructure 40 — Managing the electricity systems 46 — Facilitating the market 52 — An inside look at Elia 58 Corporate governance statement1 59 — Composition of the management bodies as at 31 December 2014 68 — Remuneration report 72 — Features of the internal control systems 76 — Risks and uncertainties facing the company 80 The Elia share in 2014 82 Consolidated financial statements 82 — Consolidated statement of financial position1 83 — Consolidated statement of changes in equity 84 — Consolidated statement of cash flows1 85 — Consolidated statement of comprehensive income 86 — Consolidated income statement1 87 Reporting parameters Discover our online report @ http://annualreport.elia.be/2014 1. These chapters form the annual report cf. article 119 of the Belgian Companies Code. The Elia Group in 2014 In fi gures DE/BE contribution to IFRS results Investments
    [Show full text]
  • Pricing Benchmarks in Gas and Electricity Markets
    OFGEM Call for evidence – Pricing benchmarks in gas and electricity markets A response by the Futures and Options Association July 2013 OFGEM Call for evidence – Pricing benchmarks in gas and electricity markets 1 Introduction 1.1 This response is submitted on behalf of the Futures and Options Association (FOA), which is the principal European industry association for 160 firms and organisations engaged in the carrying on of business in futures, options and other derivatives. Its international membership includes banks, financial institutions, brokers, commodity trade houses, energy and power market participants, exchanges, clearing houses, IT providers, lawyers, accountants and consultants (see Appendix 1) 1.2 Physical and financial markets globally adopt a wide variety of pricing benchmarks, which themselves are reflective of a great variety of market participants, circumstance and needs. A common theme across these benchmarks is their evolution over time with respect to the ever-changing needs of their respective markets and participants. This evolution has occurred across both the regulated and the un-regulated markets, and to a point where today the variety and number of benchmarks available to participants is significant. 1.3 For any producer of, or user of, a pricing benchmark, the key to its use is its integrity. This is reflective of its relevance to market users, the robustness of its methodology, and its transparency. Without integrity a benchmark has very limited worth. As an industry association the FOA believes that the PRA’s provide a critical service to markets and market participants, bringing transparency where otherwise there may be opacity. 1.4 The FOA is consequently wholly supportive of efforts to improve the transparency, robustness and integrity of benchmarks across markets.
    [Show full text]
  • 7) D * M N M M R/) M CO , O O V J `Wz Ó
    STAATSKOERANT, 21 JULIE 2017 No. 40996 111 Labour, Department of/ Arbeid, Departement van DEPARTMENT OF LABOUR NO. 715 21 JULY 2017 715 Employment Equity Act (55/1998): Public register notice 40996 REGISTER REGISTER NOTICE PUBLIC PUBLIC 1998) 1998) NO. NO. OF EMPLOYMENT EMPLOYMENT EQUITY ACT, ACT, 1998 (ACT 55 55 Schedule Schedule the the attached in in of of Oliphant, Oliphant, Minister Labour, Labour, publish Nelisiwe Nelisiwe Mildred Mildred 1, 1, Equity Equity Employment Employment of of of of Section the the 41 41 terms terms register register maintained in in hereto, hereto, the the that that submitted submitted have have of of of of designated employers 1998) 1998) (Act (Act Act, Act, 1998 55 55 No. No. Equity Equity Act, Act, of of Employment Employment Section Section the 21, 21, of of employment employment equity terms terms reports reports in in amended. amended. Act Act of of 1998 1998 55 55 No. No. as as OLIPHANT OLIPHANT MN MN MINISTER MINISTER LABOUR LABOUR OF OF o o 7 7,10/7 7,10/7 SASEREJISTRI SASEREJISTRI SOLUNTU ISAZISO ISAZISO (UMTHETHO (UMTHETHO YINOMBOLO KULUNGELELANISA KULUNGELELANISA INGQESHO, INGQESHO, 8) 8) ndipapasha ndipapasha uMphathiswa uMphathiswa wezabasebenzi, kule Iisiwe Iisiwe Oliphant, yeCandelo yeCandelo ngokwemiqathango ngokwemiqathango 41 41 apha apha irejista egcina shelwe shelwe oyiNombolo oyiNombolo ka-1998 ka-1998 (urnThetho yama- yama- ungelelanisa ungelelanisa iNgqesho, zokuLungelelanisa zokuLungelelanisa iingxelo iingxelo 'khundla 'khundla zabaqeshi abangenise abangenise wokuLungelelanisa wokuLungelelanisa yeCandelo yeCandelo IomThetho IomThetho 21, 21, emigaqo emigaqo tho tho oyiNombolo yama-55 ka-1998. ka-1998. ti r m z N CM Z =o 7) D * m N m M r/) m CO , o o V J `wZ Ó This gazette is also available free online at www.gpwonline.co.za 112 No.
    [Show full text]
  • Bijlage Overzicht Corporate Governance 4E Kwartaal
    ! ! ! Overzicht Corporate Governance 4e kwartaal 2014 In deze lijst wordt aangegeven van welke landen we staatsobligaties bezitten die direct op naam staan van het Pensioenfonds TNO. Vervolgens worden daarnaast de beleggingsfondsen genoemd waar we op 31-12-2014 in beleggen. Tot slot staat in de PDF een lange lijst van instellingen en bedrijven waarvan de obligaties direct op naam van het Pensioenfonds TNO staan. (Quasi) staatsobligaties Fixed Income Beleggingsfondsen direct op naam van Pensioenfonds TNO (13/12/2014) Duitsland BlackRock Emerging Market debt (hard Frankrijk currency) Nederland Neuberger Berman Emerging Market debt Mexico (local currency) Slovenië Robeco European High Yield fund Roemenië Ijsland Aandelenbeleggingsfondsen (13/12/2014) Italië Vanguard Inst. Index Fund Chili Vanguard SRI European Stock Index Fund Litouwen Vanguard Emerging Markets Equity Fund Spanje BlackRock Japan Equity fund exclusief controversial weapons BlackRock Pacific ex Japan Equity fund exclusief controversial weapons Obligaties direct op naam van AECOM TECHNOLOGY Pensioenfonds TNO AES Corp/VA AAF Holdings LLC Affinion Group Inc ABEST_9 Aguila 3 SA ABN AMRO BANK NV AIA GROUP LTD Access Midstream Partners LP / ACMP Fin AIB MORTGAGE BANK Accuride Corp Air Canada ACE Cash Express Inc AK Steel Corp ACHMEA HYPOTHEEKBANK NV Alcatel-Lucent USA Inc ACOSTA Alere Inc ACTIVISION BLIZZARD Aleris International Inc ADECCO INTERNATIONAL FINANCIAL SER Algeco Scotsman Global Finance Plc ADT CORP ALLEGIANT TRAVEL CO Advanced Micro Devices Inc Allen Systems Group Inc
    [Show full text]
  • Energy Networks M&A What Are the Implications for the EU? Matteo Di
    Energy networks M&A What are the implications for the EU? Matteo Di Castelnuovo IEFE Bocconi 1 Agenda • Why do energy networks matter? • Institutional framework • Recent M&A activities in energy networks • Data analysis • Conclusions 2 Why do energy networks matter? - 1 • Good timing for hosting such an event on energy infrastructures, as opposed to 15 years ago! • Today networks are known to be the pillars of the architecture in the European Energy Union. • Infrastructures have been playing an increasingly relevant role in the market in terms of what they are required to provide • More capacity (e.g. physical and virtual capacity) • More technology (e.g. smart grids, reverse flow) • More services (e.g. capacity market, hubs). 3 Why do energy networks matter? - 2 • Their importance is bound to increase due to EC’s targets for its climate and energy policies, which will require them to raise investments. • However, EU energy infrastructures face increasing financial pressure from the evolution in the market • E.g. lower regulatory incentives, lower demand, higher consumer bills, distributed generation, etc. • In Italy network costs account for 18% in a typical gas bill of 1150 Euros and an electricity bill of 530 Euros. • Thus, should we care about who own these energy networks? 4 Institutional framework: Energy Policy Trilemma Economic Efficiency Climate Security Change of Supply Energy networks 5 Institutional framework: «Ad hoc» packages Economic Efficiency Climate Security Change of Supply Energy networks Infras. Package Third Package 6 Institutional framework: «Ad hoc» Packages - 1 1. Infrastructure Package (2013): “Modernise and expand Europe’s energy infrastructure […] interconnect networks across borders” • Investment required up to 2020 in electricity and gas network infrastructures estimated at about EUR 200 billion (100 bn electricity, 40 bn smart grids and 70 bn gas) • Projects of Common Interest (PCI), based on priority corridors, with faster permit procedure and eligible for EUR 9.1 billion of EU funding (Connecting Europe Facility).
    [Show full text]
  • Emart Broch-2007.Indd
    THE EUROPEAN PLATFORM FOR ENERGY TRADING 2007 21-22 NOVEMBER AMSTERDAM MEETING POINT FOR ENERGY TRADERS SPONSORS SUPPORTED BY GOLD SPONSOR ORGANIZED BY WWW.EMART-ENERGY.COM INTRODUCTION As energy traders and originators get into the swing of of setting the framework for a cap and trade scheme for carbon the tenth annual contracting season since the adoption emission allowances post-Kyoto? Can they agree on that framework of the fi rst EU Electricity Directive, many of us will be for the EU while still negotiating international treaties to come into pondering what are the prospects for further wholesale force after 2012? energy market development. In particular we have yet • Where should lie the boundary between the regulation of energy to see whether the European Commission can push markets (if physical OTC transactions need to be regulated at all?) through proposals for a third internal energy market and any related regulation of fi nancial markets (i.e. by way of legislative package, and if it can, whether it will make much controls over energy and other commodity derivative transactions)? difference to competition and liquidity. Whilst policymakers, offi cials and TSO managers fi ddle with “rules” The content of the Commission’s package impinges on many of the applying to the operation of wholesale energy markets, we traders and energy market themes and energy trading topics, which will be under originators have no choice but to get on with our business as best we consideration at this year’s EMART Energy. Among these themes and can. Often at the forefront of making our business processes more topics you will discover, by attending EMART Energy, that some thorny effi cient, streamlined and better harmonised are professionals such questions confront those of engaged in the wholesale power, gas as lawyers, accountants, IT managers, risk managers and back offi ce and emissions markets in Europe: co-ordinators.
    [Show full text]
  • GB Wholesale Electricity Market Liquidity: Summer 2010 Assessment
    GB wholesale electricity market liquidity: summer 2010 assessment Document type: Consultation Ref: 95/10 Date of publication: 29 July 2010 Deadline for response: 10 September 2010 Target audience: Energy suppliers and generators, consumers, consumer bodies and representatives, academics and other interested parties Overview: In February 2010 Ofgem published a Consultation Document on liquidity in the GB wholesale market. It identified a number of problems with market liquidity, including the ability of independent market participants to meet their hedging requirements. The consultation outlined our intention to assess the market‟s performance in summer 2010 (this report) and outlined some possible regulatory interventions should market initiatives not address the identified problems. This report sets out an assessment framework tailored to our areas of concern and then examines market performance, as of summer 2010. We judge the market's performance to be mixed. Aggregate churn levels are increasing, and liquidity for prompt and medium term products meets the needs of most market participants. However, the evidence suggests that there are weaknesses in longer term liquidity, that price transparency has not improved and that independent market participants can find it difficult to hedge their customers‟ demand or generation output over a longer period. In light of this evidence, Ofgem is now developing further the potential regulatory interventions that could be put in place if the performance of the market in this area does not improve. As indicated in our February 2010 document we will conduct a further assessment around the end of the year to judge whether industry initiatives are addressing the issues identified.
    [Show full text]