Transmission Network Use of System charges recover the annual cost of provision, maintenance, and upgrade of the electricity transmission system, levied on generators (c.£800m) and demand users (c.£2.7bn). Stakeholders have expressed concerns about these charges, in terms of cost reflectivity and unpredictability. This uncertainty is considered to hamper investment (renewables and emerging technologies), specifically in the context of the changing energy landscape and achieving decarbonisation goals in GB.
This project will explore the feasibility and impacts of future options for change to the transmission network charging methodology, so it sends meaningful long-term signals. This will allow users to make future investment decisions, to improve security of supply and facilitate the transition to Net Zero with benefits to consumers, local communities, and the environment.
Benefits
This project will investigate and put forward options for change to ensure the charging methodology is reflective of the current and emerging energy landscape. Identifying options to improve cost reflectivity, predictability and ensuring the methodology sends meaningful long-term signals will allow network users to make future investment decisions (both relating to emerging technology-based projects (such as storage) but also critical projects such as the Holistic Network Design (HND) which considers future generation out to 2030). This will ultimately improve security of supply and support the transition to Net Zero and the achievement of GB decarbonisation goals.
Learnings
Outcomes
At present this project in in progress and currently at the analytical phase. To date, an overview has been shared with both the Task Force and wider industry (via the Charging Futures website) with detail around the approach taken to the analytical assessment, initial conclusions, potential options for change and rationale. As detailed above, these initial findings are to now be used to further collaborative discussion with industry which will subsequently then provide steer in terms of next steps for this project.
Initial conclusions from this work have indicated there are potential options for reform that may improve cost reflectivity of charges and in some cases improve predictability (by removing elements of uncertainty) for investors.
Following this output being shared with wider industry (via the TNUoS Task Force), it has been agreed that the next stage of work will be to identify what areas or options require further investigation. This will be achieved by; a walk-through in terms of conceptual assessments undertaken so far; in-depth examination of the initial conclusions and potential options identified; detailed view provided of quantitative analysis (impacts on charging etc) for each option and by network user type; identification of possible gaps in current analysis and agree options to progress further.
Depending on the outcome and options, there may be opportunity to progress suitable reforms via the standard industry governance process which would allow changes to the industry codes to be proposed and any reforms to be progressed earlier than the final report being submitted via this project
Lessons Learnt
As part of the project, we have learnt that there are significant benefits to ensuring that wider industry can learn about the work, provide robust and constructive challenge, and feedback on issues raised by the project as they arise which ultimately supports the project and its progression. As such, we have ensured all documentation has been published, feedback mechanisms have been put in place to gather views from stakeholders throughout the process i.e., a dedicated email address for the work of the Task Force and this project managed by the secretariat, as well as use of other fora such as the Transmission Charging Methodologies Forum (TCMF) which has been used as a means to update on developments and ensure views are heard from various industry parties
