Finding the right business model for electricity storage

The question of how electricity storage should be treated by regulators is once again in the news, with National Grid and UK Power Networks making submissions to the UK Government setting out their reasons for wanting to be able to own and operate electricity storage assets themselves. They argue that as storage can be used as an alternative…

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Why energy price caps are not the way forward

Once again we hear in the news the ominous threats of energy price caps in response to retailers raising their prices, and while the desire of politicians to respond to consumer anger is understandable, this is a temptation they need to resist. The dangerous logic of price caps assumes that prices are inflated in order…

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Energy security: can you ever have too much?

I recently wrote about the calls from the House of Lords for energy security to be prioritised over the other elements of the trilemma. With the end of Winter 16 almost upon us, and with it the end of the Supplementary Balancing Reserve (“SBR”), it’s reasonable to ask what is level of supply margin is…

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Embedded benefits: changes coming from all directions

The much anticipated changes to the embedded benefits regime came a step closer last week with Ofgem’s announcement that it is minded to implement a proposed change to the CUSC that would limit the demand residual component of TNUoS payments to embedded generators to around £2 /kW, down from current levels of £45 /kW. A…

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House of Lords joins call for electricity market reform

Last week the UK’s House of Lords Select Committee on Economic Affairs joined the calls for electricity market reform, in a critical report: The Price of Power: Reforming the Electricity Market saying that the Government’s energy policy objectives conflict with each other, and have led to a situation where supply margins are tight at the…

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Transmission charging: an out-dated cost-recovery framework distorts the market

Transmission charging is far from simple even in the traditional model of electricity networks, as illustrated by the diagram below. In principle, the costs of bringing electricity from large units of generation to consumers is socialised across users via three main tariffs: Transmission Use of System Charges (“TNUoS”), Balancing Services Use of System Charges (“BSUoS”) and…

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