The electricity system operator (ESO) at National Grid has proposed overhauling the transmission charging zones for generators due to concerns that the tariffs are becoming increasingly unstable and unpredictable.
Great Britain is currently divided into 27 zones, with generators facing different Transmission Network Use of System (TNUoS) charges in each. But, this number is set to rise to 50 when the second set of RIIO price controls begins in 2021 and is expected to continue rising for each subsequent price control period.
Under the current charging methodology as set out in the Connection and Use of System Code (CUSC), the marginal cost of connecting a new generation asset at different nodes of the transmission network should vary by no more than £1.00/kW across each zone.
However, the changing configuration of the energy system means the only way to adhere to this rule is by increasing the number of zones. The ESO pointed out that in certain circumstances a single generation connection could constitute a zone in itself, with its own tariff.
According to the body, this issue is likely to lead to regular tariff changes, creating significant uncertainty for investors. It said the current arrangements are “not the most efficient way to ensure cost-reflectivity” and fail to provide “appropriate investment signals to generators seeking to connect”.
It has therefore proposed a modification to the CUSC, called CMP324, that would permanently align the zones with the 14 license areas of the distribution network operators, which are already used to set transmission charges on demand. It said this would not only make the tariff more stable and predictable but create a more consistent charging regime across generation and demand.
The modification was presented to the CUSC panel at the end of last month for consideration by a work group. For the changes to take effect before the number of zones increases in April 2021, the modification would need to be approved by no later than mid-October next year.