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Electricity tariffs and embedded renewable generation

Objective




Renewable generation differs from conventional generation both by its energy source and by its location in the power system Renewable generation is distributed over wide geographical areas and so is embedded in distribution networks often close to customers. Due to its location, embedded generation not only acts as another source of electricity but it can potentially substitute for transmission and high voltage distribution facilities. Preliminary indications are that tariffs which adequately reward embedded renewable generation schemes for the impact they make on the network losses and capital can lead to a benefit of up to 30 ,b of the retail electricity price. At present however, the planning and tariff arrangements for electrical power systems do not recognize this impact which then leads to economic distortions in general, penalizes embedded renewable generation, and may adversely affect the competitiveness of ERG and its positioning in the EU electricity supply market.

The overall objective of the project is to assess the impact of the present power system planning principles, standards and tariff structures on the competitiveness of ERG in terms of their ability to recognize the impact of ERG on system costs, and to propose a framework for the development of new network tariffs to reflect this impact.

Specific technical objectives of the projects are to:
1. Critically review the fundamental concepts behind existing network planning practices and electricity tariff structures in terms of their ability to capture and recognize the additional value of ERG.
2. Identify methods and techniques for the development of tools to track system costs quantitatively and compute the additional value of ERG. Develop appropriate computer based tools.
3. Propose new tariffs which recognize the specific location of ERG and its impact on power system losses and network capital costs. Develop tools for evaluation of location specific time-of-use network tariffs. 4. Apply the new concepts using the computer tools developed on Two o example networks and calculate the additional value of ERG, quantify the impact of ERG on network losses and network capital and set the tariffs to reflect this impact.
It is envisaged that the results of this research work can be used by utilities to improve existing network planning and operational practices with respect to further integration of ERG in the networks. Furthermore, this investigation should enable utilities to consider alternative tariff structures that more accurately reflect the temporal and spatial distribution of network running and capital costs. This project is also envisaged to enable the EG companies to quantify the additional, 'real' value of their electricity.

Funding Scheme

CSC - Cost-sharing contracts

Coordinator

UNIVERSITY OF MANCHESTER INSTITUTE OF SCIENCE AND TECHNOLOGY
Address
Sackville Street
M60 1QD Manchester
United Kingdom

Participants (3)

National Technical University of Athens
Greece
Address
42,Patission Street 42
10682 Athens
National Wind Power Ltd
United Kingdom
Address
Furlong Road
SL8 5AJ Bourne End - Buckinghamshire
Public Power Corporation of Greece
Greece
Address
56,Solomou Street 56
10682 Athens