ECONOMICALLY EFFICIENT NETWORK CHARGING METHODOLOGY FOR A SYSTEM WITH SIGNIFICANT INTERMITTENT GENERATION

The planning and operation of electrical-power supply systems are undergoing rapid change following the recent privatisation of the industry. A key goal of these changes is to increase plant-operating efficiency and to reduce electricity costs. Further change is driven by social and governmental pressure to reduce carbon-dioxide emissions. These changes create significant technical, commerical and regulatory challenges. A most pressing techno-commercial challenge is planning of networks in this new environment. Supply networks transport electricity from points of generation to points of consumption. The networks themselves are owned by companies such as The National Grid. Network users, such as generation companies, large industrial customers and suppliers, actually generate and consume the electricity carried by the network. Relationships between the network owners and users are purely commercial. Network investment is very expensive. For example, the cost of even low-voltage distribution lines is in the order of 5M/km. This cost is compounded by the long infrastructure lead times. For example, overhead lines can take 7 - 10 years to install. Forward network planning is therefore critical to the delivery of affordable, reliable and secure electricity.However, the necessary forward planning is very difficult because the network owner cannot control the site, size or type of future electricity generation (power stations), or the future demand itself - except through the use of economic incentives. These incentives take the form of charges made to users for their use of the network. The efficiency and the ability of the present charing structure to support the government energy policies are therefore of great concern to the DTI and Ofgem. Consequently, network owners must develop new network-charging methodologies to face up these challenges. This project will develop novel and efficient network-charging methodologies that for the first time use long-term network cost as a key cost driver and for the first time, properly account for the contribution to a network from renewable generation through a probabilistic approach. The key features of the methodologies are that they will:1. Provide forward-looking, economic guidance on the efficient siting of future generation and demand2. Unify the charging structures for transmission and distribution networks3. Incentivise efficient network usage and development 4. Reflect key cost drivers in the charging models 5. Be simple to implement, applicable to different networks and different degrees of renewable energy penetrationThe methodologies will be developed and validated by modelling the dynamic interactions between network pricing and planning on time-scales of up to 20 years. A market simulator will be developed as part of the project, modelling the interaction of network owners and users in an uncertain commercial environment. The simulator will work in conjunction with decision-making models of generation, demand and network planning to be developed from the applicant's existing research. The tested and validated methodologies will guide future network charging strategies and allow efficient networks with low carbon generation to be developed in a timely fashion.The key strengths of the project are: i) it will place the applicant in a world-leading position in power-market design and regulation, ii) it combines engineering and commercial expertise in a strongly interdisciplinary study, iii) it represents a logical development of the applicant's research, iv) it is strongly supported by the UK's power industry and leading international experts and v) the results will be of great benefit to the electricity supply industry, helping the UK retain its internationally-leading position in power-market design and regulation.