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GB Electricity Industry for Dummies® These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. GB Electricity Industry Chris Beard, CGI These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. GB Electricity Industry For Dummies® Published by: John Wiley & Sons, Ltd The Atrium Southern Gate Chichester West Sussex PO19 8SQ England www.wiley.com © 2013 John Wiley & Sons, Ltd, Chichester, West Sussex. For details on how to create a custom For Dummies book for your business or organisaiton, contact [email protected]. For information about licensing the For Dummies brand for products or services, contact BrandedRights&[email protected]. Visit our homepage at www.customdummies.com. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or other- wise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior per- mission of the publisher. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: WHILE THE PUBLISHER AND AUTHOR HAVE USED THEIR BEST EFFORTS IN PREPARING THIS BOOK, THEY MAKE NO REPRESENTATIONS OR WARRANTIES WITH THE RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CON- TENTS OF THIS BOOK AND SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTIES OF MER- CHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IT IS SOLD ON THE UNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING PROFESSIONAL SERVICES AND NEI- THER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HERE- FROM. IF PROFESSIONAL ADVICE OR OTHER EXPERT ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. ISBN: 978-1-118-75570-9 (pbk) Printed in Great Britain by Page Bros These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. About the Author Chris Beard is one of CGI’s leading Subject Matter Experts in energy markets. Author of Smart Metering For Dummies and Smart Grids For Dummies, Chris has spent the last 17 years working across all parts of the energy industry, helping companies to adapt and thrive within the ever-increasingly de-regulated market. Acknowledgements Many people have contributed to this book and we’d like to take this opportunity of thanking them: Sandra Bain, Mark Bygraves, David Crossman, Jodie Eaton, David James, Jeremy Gann, David Leck, Tara McGeehan, Karen Beckett and Steve Westlake. These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. Publisher’s Acknowledgements We’re proud of this book; please send us your comments at http://dummies. custhelp.com. For other comments, please contact our Customer Care Department within the U.S. at 877-762-2974, outside the U.S. at (001) 317-572-3993, or fax 317-572-4002. Some of the people who helped bring this book to market include the following: Acquisitions, Editorial, and Vertical Composition Services Websites Senior Project Coordinator: Kristie Rees Corporate & Custom Publishing: Layout and Graphics: Carrie A. Cesavice, Scott Smith Andrea Hornberger Project Editor: Jo Jones Development Editor: Charlie Wilson Production Manager: Daniel Mersey These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. Contents at a Glance Introduction ............................................................................................... 1 Chapter 1: Getting to Grips with the Basics........................................... 5 Chapter 2: Generation ............................................................................. 13 Chapter 3: Transmission ........................................................................ 25 Chapter 4: Distribution ........................................................................... 37 Chapter 5: The Retail Market ................................................................. 47 Chapter 6: The Wholesale Market ......................................................... 59 Chapter 7: Settlement ............................................................................. 71 Chapter 8: Regulation ............................................................................. 87 Chapter 9: The Smart Metering Implementation Programme ........... 99 Chapter 10: Ten Take-Away Points to Remember ............................. 115 Appendix: Timeline ............................................................................... 117 These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. Table of Contents Introduction ..................................... .1 About This Book ........................................................................ 1 Foolish Assumptions ................................................................. 1 How This Book Is Organised .................................................... 2 Icons Used in This Book ............................................................ 2 Where to Go from Here ............................................................. 3 Chapter 1: Getting to Grips with the Basics .......... 5 Coming Full Circle ...................................................................... 5 Understanding the Electricity Industry Structure ................. 7 Reviewing How We Got Here .................................................... 8 Nationalisation ................................................................. 9 Privatisation ..................................................................... 9 Vertical integration ........................................................ 10 Outlining the Key Industry-Wide Challenges ........................ 11 Chapter 2: Generation ............................ 13 What’s Generation All About? ................................................ 14 Looking at fuel types ..................................................... 14 Sizing up scale ................................................................ 16 Considering flexibility ................................................... 17 Assessing the Generation Mix ................................................ 17 Who Are the Major Players? ................................................... 18 What Are the Big Issues? ......................................................... 20 New nuclear .................................................................... 20 Carbon Capture and Storage ....................................... 20 Renewable Obligation ................................................... 20 Feed-In Tariff Scheme ................................................... 21 Electricity Market Reform ............................................ 21 Project TransmiT ........................................................... 22 European Target Model ............................................... 22 Large Combustion Plant Directive .............................. 22 Industrial Emissions Directive .................................... 23 Chapter 3: Transmission .......................... 25 What’s Transmission All About? ............................................ 26 The transmission network ............................................ 26 Balancing the transmission network .......................... 28 Planning investment ..................................................... 28 Charging for transmission ........................................... 29 These materials are the copyright of John Wiley & Sons, Inc. and any dissemination, distribution, or unauthorized use is strictly prohibited. viii GB Electricity Industry For Dummies How Has Transmission Changed? .......................................... 29 Who Are the Major Players? ................................................... 31 How Is Transmission Regulated? ........................................... 32 What Are the Big Issues? ......................................................... 32 Growth in renewables ................................................... 32 Deep or shallow connections? ..................................... 32 ‘Invest and connect’ or ‘connect and manage’? ......... 33 Greater European integration ...................................... 33 RIIO – TD1 ....................................................................... 33 Project TransmiT ........................................................... 33 Offshore wind farms ...................................................... 34 Chapter 4: Distribution ........................... .37 What’s Distribution All About?............................................... 38 The distribution network .............................................. 38 Charging for distribution
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