London (Platts)--21Apr2008

The UK renewables industry has attacked complex proposals to shake up the
way generators access the transmission system.
The UK government and energy regulator Ofgem earlier in April put forward
plans to tackle the large queue of projects applying for connection to the
transmission network. There are around 11,000 MW of mainly renewable
generation projects seeking transmission connections in Scotland alone.
The queue to obtain access means that many projects will not be able to
connect to the system for many years, impacting the government's renewable
generation expansion plans.
Ofgem and the Department for Business, Enterprise and Regulatory Reform
have been looking at how to shake up the transmission access regime, and is
conducting a Transmission Access Review (TAR).
As well as holding industry seminars, they have published a number of
reports on the issue over the past year or so. The latest was published this
month and outlines three potential models, dubbed "straw men", for access
reform.
Model A: connect and manage
A simple proposal favored by the renewables industry that would allow any
new generator to connect to the system as soon as they want to.
However, speed comes at a cost because any constraint costs resulting
from the addition of the new plant are imposed on all users of the system.
Constraint costs could arise because some existing generators may have to
be paid to cut their output to allow the new generator, say a wind turbine, to
put power onto the congested grid at certain times, namely when it is windy.

Model B: long-term market-based mechanism
This would introduce a market mechanism to ration the existing access
rights to the system. This could take the form of long-term auctions.
Potentially, this could lead to some existing generators and new users
not being able to access the transmission system.

Model C: short-term trading
This would introduce a mechanism to ration the existing access rights to
the system and set prices for access--potentially on a half-hourly basis.
Again, there is a risk of some existing generators and new users not
being able to access the transmission system.
The latter two proposals have come under attack from the renewables
industry, which wants to see priority access to the transmission system given
to green generators.
Representatives of various renewable trade associations met with Ofgem
and BERR officials late last month to discuss the issue and express their
concerns.
Gaynor Hartnell, deputy director of the Renewable Energy Association,
told Platts Monday: "BERR should have made a decision about priority access at
the outset and steered the TAR process towards the 'connect and manage' model.
Why build three straw men, when two of them should undergo spontaneous
combustion?"
The most important outcome, she said, was "getting speedy access to the
grid. BERR told a delegation of trade association representatives that its
objective was that any project should be able to connect within three to five
years of requesting. If this is achieved the REA will be less concerned about
priority access. But until it is guaranteed, priority access will remain
firmly on our agenda."
A renewable industry source told Platts Monday that unnecessary major
reform of transmission arrangements could damage the UK's carbon reduction
ambitions.
The source said: "Connect and manage is the option that can deliver
government targets. Why waste time rearranging market mechanisms when we
should be building new generation? Any delay in building renewables will cost
us in carbon."