Generation Dominated Areas

1. Generation Dominated Areas Oliver Day

2. Generation Dominated Areas • MIG workgroup set up to explore three ‘charging’ options for HV connected generators and submit a DCUSA change proposal • Workgroup picks up from the work previously undertaken by Frontier Economics • Five meetings have taken place • Group have: • Establish a revised GDA specification • Developed a GDA identification template • Started to analyse results based on latest LTDS • Started to draft ‘final’ report

3. Test for GDA • GDA is defined as “a primary substation where thermal reinforcement is more likely to be caused by generation than demand, within a specific time period” • GDA test uses a variation of the test developed by Frontier Economics and uses LTDS data on primary substations • A second test has been added to ensure a ‘charge’ signal is not removed where a generator is supporting a demand loaded substation • The second test validates whether generation loading is higher than the demand loading • Both tests are conducted over 2.5 year, 5 year, 7.5 year and 10 year time horizons

4. First test Substation Firm Capacity (summer) < Gen Capt – Min Demandt Test considers the net of generation and min demand growth and asks will it exceed the substation firm capacity in a given year? Is generation driving reinforcement? • Substation Firm Capacity (summer) • = Firm capacity x Summer weighting • Gen Capt • = Estimated generation capacity in year t • Min Demandt • = Estimated minimum demand in year t

5. Second test Gen Capt – Min Demandt > Max Demandt – Min Generationt Test considers the generation and min demand growth and asks will it exceed the max demand and min generation growth in a given year? Is demand still a factor in the need to reinforce? • Max Demandt • = Estimated max demand in year t • Min Generationt • = Estimated min generation capacity in year t

6. Charging Options Workgroup explored three charging options Option 1: The introduction of a very simple locationally varying charging regime for HV generation Option 2: The introduction of a simple regime for levying credits on HV generation Option 3: To amend the existing charging regime so that credits are removed from HV generation in locations that are considered to be generator dominated

7. Option 1 Simple locational varying Mirrors existing HV structures Eight sets of charge Each primary substation given generation dominance ‘rating’ Four x Intermittent Four x Non-intermittent Each HV generator assigned to a primary substation 1 ‘Norm’ – Full Credit – 10 years to GDA 2 ‘Low’ – 67% Credit – 7.5 years to GDA 3 ‘Med’ – 33% Credit – 5 years to GDA 4 ‘High’ – No Credit – 2.5 years to GDA

8. Option 2 Simple credit regime Existing HV structures Two sets of charge DNO area adjustment based on GDA in 5 years 1 Intermittent x factor Capacity of GDA substations Total capacity 2 Non-intermittent x factor

9. Option 3 Remove credits from GDA Mirrors existing HV structures Four sets of charge Each primary substation given generation dominance ‘rating’ if GDA in 7.5 years 1 Intermittent GDA – no credit 2 Each HV generator assigned to a primary substation Intermittent ‘norm’ – full credit 3 Non-intermittent GDA – no credit 4 Non-intermittent ‘norm’ – full credit

10. Option variants • Many variants of the options considered • Workgroup trying to balance cost reflectivity with sensible and transparent application • Other variants include: • % reduction in credit only to apply to network level of generation dominance i.e. Primary substation • Credit remains for those sites with Generation Side Management (GSM) agreements • No variant ruled out – desire for pragmatic approach

11. Option preference • Workgroup evaluated options based on charging principles • Option 1 provided most pragmatic approach when GDA identified • Option 2 would reduce credits at locations where generation support was most needed • Option 3 would cause most potential for volatility if substations flipped one year to next • Workgroup preferred to provide a granular price signal • Current preference to recommend option 1

12. Initial analysis • *Based on previous LTDS data used for Frontier analysis

13. Initial impact • *Based on previous LTDS data used for Frontier analysis – sample from 1 DNO group

14. Next Steps • DNOs currently populating GDA template based on latest LTDS data • Workgroup drafting report for MIG with recommendation and DCUSA change proposal • Aiming to deliver report to MIG for 19 April