Ofgem review of embedded generation benefits - (CMP264 and CMP265)
Ofgem have highlighted concerns about the electricity transmission network charging arrangements for smaller Embedded Generators (EG), including the exemptions and payments collectively referred to as ‘Embedded Benefits’. Ofgem have previously indicated that the ability of a supplier to use sub-100MW (‘smaller’) EG to reduce transmission use of system charges, and for smaller EG to be paid to help others avoid them, is a distortion. Ofgem indicated in July and again in December 2016 that one element – specifically the TNUoS Demand Residual (TDR) – was a significant cause for concern.
Industry has raised modifications CMP264 and CMP265 to address these distortions – the impact assessment can be found at the following link:
Ofgem’s confirmed their decision in June 2017 that the level of TDR payment to smaller EG should be reduced to the level of avoided Grid Supply Point (GSP) costs, and introduction of the new arrangements should be phased over three years from 2018 to 2020.