The Embedded Generation Working Group Report into Network Access Issues.
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Foreword by the Chairman
Embedded generation is not a new concept. It has been a feature of the electricity industry since it began more than a century ago. But recent Government initiatives on generation from renewable sources and combined heat and power (CHP) stations have focused attention on how embedded generators are treated in the energy market. For example, the recent report of the Royal Commission on Environmental Pollution called on the Government to review how electricity networks can best be financed, managed and regulated in order to stimulate and accommodate large contributions to energy supplies from CHP plants and renewable sources, while maintaining reliability and quality of supplies.
During the year 2000, the Embedded Generation Working Group has considered a wide range of issues relating to embedded generation. In this report the Group makes initial recommendations for action by relevant bodies to help ensure that embedded generation is treated on an equitable basis compared to other users of distribution and transmission networks.
The Group has identified that current arrangements are not conducive to the development of embedded generation. This report puts forward a series of initial recommendations, together with a proposed timetable to implement changes. Taking account of the physical limitations of the networks themselves, and how they are planned and operated, the recommendations focus on changes that would facilitate the connection of embedded generation. There are also recommendations on regulatory, transparency and charging issues as well as the wider questions of appropriate incentives and how network operators will achieve their new Utilities Act duty to facilitate competition. However, it may be that the removal of barriers by itself may not encourage the scale of embedded generation implicit in the Government’s targets for renewables and CHP. Further incentives which Government may give to embedded generation are outside the scope of this work.
The recommendations of the Group are intended to stimulate feedback and debate. We look forward to challenging responses so that the Group can produce its final recommendations for action in the first quarter of 2001.
The Group’s role and its approach to its objectives have been unique. Its membership comes from a wide range of stakeholders including Government (DTI, DETR and other agencies), the regulator, OFGEM, and the industry. The Scottish Executive attended the meetings as an observer. Industry members include representatives of different types and sizes of generators; transmission and distribution companies; suppliers; and large and small customers. The Group agreed at the outset to make its work as clear and readily available as possible. Notes of its meetings and reports have been published on the DTI website to enable all interested parties to see and contribute to the Group’s thinking.
One of the most striking features of the Group has been the open, frank and constructive approach of all its members. Despite their different institutional and commercial backgrounds and drivers, each of them has contributed in a positive way. Many mutual misunderstandings amongst stakeholders have been dispelled. And most importantly, members have found it possible to reach consensus views on most of the issues under consideration.
Many of the Group’s initial recommendations concern the legislative and regulatory framework for embedded generators and network operators. It will be for the bodies with relevant responsibilities and powers to consider and implement change where appropriate. The Group will have met its objectives when this happens. Its final report and recommendations will be a catalyst for action and a means of tracking progress against the challenging objectives it will set.
Brian Wharmby
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