Ofgem’s new consultation on network charging and access is an important step towards market reform

Ofgem has published the latest strand in its ongoing work on making network charging arrangements fit for purpose against a backdrop of significant changes to the nature and use of both transmission and distribution networks. It has issued a consultation into network access arrangements and forward-looking charges, and whether a Significant Code Review (“SCR”) should…

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Relying on interconnectors for security of supply carries risks

Last week Will Gardiner, chief executive of Drax Group, told the Guardian newspaper that Britain’s increasing reliance on electricity imports through the use of interconnectors is a threat to energy security, and will result in the country importing carbon emissions. He also said that interconnectors would fail to deliver the aims of the government’s industrial…

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Market coupling failures undermine the Internal Energy Market

There are two main pillars to European energy policy: the internal energy market (“IEM”) and the Climate Change Package. The IEM was the result of extending the Single Market into energy, and involved the unbundling of networks from generation and supply with regulated rather than negotiated access to those networks. The ultimate goal is the…

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RIIO-2: Ofgem consults on tougher price controls for networks

Last week Ofgem has published its consultation for the next round of price controls for energy networks, known as RIIO-2. RIIO-1 had been strongly criticised for allowing network companies to generate above average levels of returns on businesses that are seen to be less risky than the wider economy. Network companies have been earning returns…

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Political dispute in the Balkans causes electricity system frequency deviation across Europe

I have written several times about the challenges facing system operators as the energy transition sees increasing amounts of intermittent generation increasing frequency variation. However, between mid-January and early March, there was a persistent frequency deviation that caused clocks to lose time across the 25 countries connected to central Europe’s synchronous electricity system that had…

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Responding to the challenges of transmission system transformation

Last week, National Grid outlined its plans for it system operator business, following the decision by Ofgem last year that greater separation of this activity was needed from the rest of the National Grid business in order to better manage conflicts of interest. “Our long-term vision is for an Electricity System Operator (ESO) that thinks…

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Updating frequency control and reserve markets

In December, National Grid published a new roadmap for its frequency control and reserve markets, setting out the principles which are to govern the development of balancing services products with a view to providing greater clarity and investor certainty. Described in more detail below, the changes are designed to simplify the procurement process and allow…

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Is it time to look differently at security of supply?

National Grid’s outlook for the coming winter is somewhat more positive in capacity terms than in previous winters, with a capacity margin of 6.2 GW or 10.3%. “We are confident that we have the right products and strategy in place to help us to balance the system, even under colder conditions than we have experienced…

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