Tag Archives: Distribution

Licence Lite Update

October 2013: There has been little news recently on progress being made for the first ‘license lite’ license to  be awarded – however – discussions do continue and below some recent references to the initiative are gathered together.

First, DECC’s Community Energy – Call for Evidence paper published in June 2013 covered the issue stating:

“96. Community renewable electricity projects typically sell their electricity through Power Purchase Agreements (PPAs), whereby an energy supply company agrees to buy electricity from a generator over a fixed period of time at a fixed rate. For community electricity generators it can be difficult to negotiate with large energy supply companies. Aggregators such as Smartest Energy have in the past helped community groups overcome this hurdle. We also recognise that the move from the Renewables Obligation to the Contracts for Difference (CfDs) is a significant one and that the structure of PPAs will need to change, to reflect the changes to the risk profile and the structure of CfDs. The Government has initiated a process to support the market in preparing for the CfD in order to speed this transition and reduce costs.

97. Another route to market for community-generated electricity is Licence Lite, a new form of electricity supply licence, which was proposed by Ofgem in February 2009. The purpose of the licence is to enable smaller scale electricity generators to overcome the costs, risks and complexities of operating in the electricity supply market. If successfully implemented, it will enable them to supply electricity into the retail electricity market and earn a higher market rate than at present for the power they produce.

98. Although no Licence Lite has yet been granted, initial applications have recently been made, including by the Mayor of London, through the Greater London Authority. We hope this will help resolve some of the issues around selling community-generated electricity, and we will be keen to see what evidence comes out of these cases.

And two recent workshops also provided some information on the background to Licence Lite. At Ofgem’s community energy workshop held in September, Ofgem officials provided a short presentation on the basic benefits of being ‘License Lite’. And law firm Nabarro – who have undertaken significant work in this area for the GLA – held an event in July with a strong focus on licence lite where a helpful presentation was provided by the GLA providing information of their work to date and anticipated further actions. Some previous posts also go into further detail.

Posted in Decentralised Energy, News | Tagged , | Leave a comment

London’s electricity infrastructure under spotlight

October 2013: The issue of London’s electricity infrastructure is being raised in several quarters now, most recently by the Mayor in a letter to Secretary of State for Energy , Ed Davey, and through the Mayor’s High Level Electricity Working Group. More recently the GLA London Infrastructure Group has looked at future constraints on London’s electricity network, which has led to the recent commissioning of a piece of research work looking at barriers to connection to the electricity distribution network in the capital.

The latest meeting of the Infrastructure Group turns again to this issues, with a short briefing paper (Agenda Item 4 Appendix A) presented for discussion which highlights the following:

the UK’s poor ranking on electricity connections (only 62nd out of 185 economies) in the World Bank’s ‘Ease of Doing Business’ survey (London example was used for UK assessment), the Prime Minister’s Office and the Department for Business Innovation and Skills (BIS) are now investigating the issue and officers as well as Matthew Pencharz are in touch with relevant officials.

In relation to the recently commissioned research the paper states this “is expected to conclude in January/February 2014, and on its basis further discussions with the Government and other key players about improving infrastructure funding arrangements will be initiated.”

Posted in News | Tagged , , | Leave a comment

Mayor’s concerns over London’s future electricity supply – correspondence with Ed Davey

September 2013:  The Mayor’s concerns over “uncertainties of our energy supply and growing chances of supply disruption in the coming years” have been highlighted in correspondence between Boris Johnson and Ed Davey, the Secretary of State for Energy and Climate Change, Ed Davey,  released this week.

The Mayor writes that his “priority is delivering the jobs and growth that will ensure London remains the best big city in the world in which we live, work and invest, and having a secure energy supply will be absolutely crucial to achieving this… I am adamant that we must do everything in our power now to ensure that the lights will stay on in the future.”

The Mayor calls for major changes to the regulatory control framework rules for distribution network operators (DNOs). As these are predominantly monopoly businesses, the operating framework is set by energy regulator Ofgem. DNOs are the companies operating the local electricity grid (as opposed to the higher voltage ‘national transmission grid’) and in London the majority of the distribution network is managed by UK Power Networks and parts of west London by Scottish & Southern Energy. The Mayor letter calls for a “urgent review of the currently regulatory regime to ensure that DNOs are able to invest in energy infrastructure and install capacity ahead of need”.

The Mayor highlights problems with current legislation and – interestinglypoints to “the way Ofgem interprets and exercises its regulatory functions [which] are not fit for purpose” and finally calls upon the Secretary of State for ideas on how to give “DNOs in London substantially more scope and flexibility to reduce the level of network stress and improve strategic investment in London’s electricity infrastructure.”

In response to the tightening of electricity supply capacity over the next few years Ed Davey refers to possible extensions to existing balancing services operated by National Grid and in the “medium term …steps to ensure sufficient investment in capacity via the Capacity Market, with the first auction taking place in 2014 for 2018/19 delivery.”

On the issue often brought up by businesses – the speed of installing electricity connections to new users – the Minster’s letter touches upon current Ofgem work to set the new electricity distribution price control (called RIIO ED1) and sets out that “the existing framework provides the flexibility to drive efficiency outcomes in the vast majority of cases.”

The Mayor’s correspondence with Ed Davey is set out in Appendix 6a of the following GLA document.

The Mayor has established a ‘High Level Electricity Working Group’ to look at many of the issues raised above and minutes and papers from the three meetings that have taken place to date of this group can be found here. A further recent paper looking at London’s electricity infrastructure  by the London Infrastructure Group can be viewed here.

Posted in News | Tagged , , , | Leave a comment

Deputy Mayor tours National Grid’s new “electricity superhighway”

July 2013: Deputy London Mayor Sir Edward Lister visited National Grid’s London Power Tunnels construction site in Wandsworth. The project will create a 32km “electricity superhighway deep below the capital”. Read full news release here.  More on the London Power Tunnels project here.

Posted in News | Tagged , | Leave a comment

London’s Electricity Infrastructure

July 2013: A recent meeting of the London Infrastructure Group, part of the London Enterprise Panel (the local enterprise partnership for London) included a paper considering requirements for London’s growing electricity infrastructure.

The paper highlights that “UK Power Networks (UKPN) is London’s main Distribution Network Operator (DNO) for electricity serving all except the London boroughs of Hillingdon, Hounslow and Ealing. Scottish and Southern Energy serve these boroughs. As DNO UKPN’s responsibility extends from the Grid Supply Points where it takes electricity at high voltages from National Grid to the supply of London’s homes and businesses.”

UKPN is currently consulting on its 2015 – 2023 Business Plan which is to be submitted to Ofgem.  Much of the detail around UKPN’s proposals in the Plan have been discussed in recent meetings of the Mayor’s High Level Electricity Working Group and an appendix paper to the London Infrastructure Group meeting considers some key elements of the Plan.

The papers report that the Mayor has raised concerns regarding future investment in London’s electricity distribution infrastructure and that UKPN latest proposals “represent a step backwards regarding the prospects of UKPN investing in advance of need. It gives rise to concern about whether UKPN has taken sufficiently full account of the needs of the City of London and other central London boroughs facing business and development growth. The reason for the backward step is mainly attributable to the intervention of Ofgem” (some of these concerns on future needs were recently raised by businesses in the recent West End Commission report).

Investment in major substations has been reduced from £170 million to £100 million compared to the original draft. UKPN now includes only four of the planned six (plus Earls Court1) major substations for central London on a funded basis (see Table 1 below for details). The origin of the change is principally Ofgem’s unwillingness to accept the remaining three substations as part of UKPN’s regulated asset base, since they would amount to investment by UKPN in advance of an actual connection being requested.

Interesting to note that other changes have been made to UKPN’s forecasts of sustainable energy investment in response to comments to the original consultation. These include changes to the assumptions regarding the uptake of electric vehicles and to the infrastructure investment for Feed–in–Tariff eligible generation.

Posted in News | Tagged , , , , , , | Leave a comment

Comparing PV in London to other regions

January 2013: With the publication of Ofgem’s new  FITs newsletter (Quarterly Report 10 – December 2012 which looks at data up to September 2012) – it’s useful to look at back at the data over the past 10 issues and see how the capital has been faring under the programme with respect to most appropriate of the FIT technologies – photovoltaics (ie PV or solar electric). It should be noted that PV makes up 98% of FIT installations and 90% of total FIT generation capacity installed (see the newsletter for full details).

Previous posts (here and here) have looked at various FIT data sets and highlighted the fact that London has had the lowest capacity of PV installed of any region.

Plotting the installation rates of PV capacity per region per quarter (as provided by data in the Ofgem newsletters) since the FIT programme started (April 2010) provides a comparison of not only how low London’s capacity is compared to other regions of the country (London is the line skirting along the bottom, just below the North-East), but also how the various regions reacted to the sudden and major change in FIT tariffs (a good summary of which is in the following Guardian article).

The majority of regions witnessed a significant’spike’ in the number of PV systems installed as a result of the Government’s announcement that there was to be an near-immediate reduction in the FIT tariff level for PV.  However, in London, though there there was an increase – it was incredibly modest compared to nearly all other parts of the country. Does this reflect:

  • A low level of interest in PV by Londoners?
  • More renters and more flats in London reducing demand for PV?
  • Perhaps only a small number of companies are offering PV in the capital?
  • Less knowledge in the benefits of PV by Londoners?
  • Or are PV companies more attracted to doing business outside London – ie cheaper staff, less hassle factor, easier to put up scaffolding etc etc – more installs mean more money for them?

Whatever the reason, the potential of the most appropriate of the renewable technologies for London is currently being unrealised. The GLA’s 2012 London renewable energy study estimated that PV has the technical potential to supply up to 19% of the capital’s electricity consumption.

NB More recent data – up to December 31 2012 – is available in Ofgem’s latest  FIT register database of 8 January 2013 (link  to the Excel spreadsheet here – it’s a big file at 39MB with around 350,000 separate entries for FIT installations across the UK). The database indicates that of the 31MW of PV capacity in London, the vast majority – around 27 MW – comes from small scale household installations.

Posted in Decentralised Energy, News, Renewable Energy | Tagged , , | Leave a comment

GLA to apply for a ‘junior’ electricity supply licence

29 October 2012: The GLA are apply to the energy regulator Ofgem for a ‘junior or sometimes known as  ‘lite ‘ electricity supply licence. This allows for smaller electricity generators to sell their electricity at market value. The approval form sets out that “the application to Ofgem  [is] for a licence lite licence so the GLA can buy the electricity produced by London boroughs and other public sector decentralised energy generators in London and sell it at proper market rates”. This project builds on an earlier GLA project (details here).

The background to this issue is actually quite simple but solutions complex! Luckily some helpful commentaries are posted on the web by Carbon Limited and also law firm Nabarros. At the heart of the argument is that smaller generators are often in poor bargaining positions with the electricity retail market when wanting to sell their electricity. The true value of the electricity generated by a decentralised CHP, or PV array, could be realised by selling the electricity direct to consumers (very roughly say, around 12-14 pence per unit) rather than the wholesale market (again roughly, but say 4-6 pence per unit).

However, to do this, an electricity supply licence (for generators exporting more that 2.5 MW) is, in most instances required, and holding such a licence places a number of very complex and costly requirements on the licence holder, effectively creating a barrier to entry for smaller generators in this market. Recognising this situation, Ofgem introduced arrangements for a new ‘lite supply licence’ which – in theory  – would allow the holder to sell their electricity more widely but provided exemptions to these smaller generators from the requirement to be involved in a number of complex electricity market processes, as would normally be required under a ‘full’ supply licence conditions (see the ‘Final Proposals document by Ofgem posted here for more on this).

In practice however, though a project with a number of London boroughs looked at this issue earlier this year, no participants have applied to hold such a licence. Hence, with this action, the GLA is looking to test Ofgem’s process and apply for this new licence and support the development and production of decentralised energy supply in London.

Posted in News | Tagged , , | Leave a comment

Who supplies electricity to Londoners?

11 September 2012: A recent parliamentary question highlights the extent the Londoners continue to use the local energy supply company EDF Energy (who took over London Electricity fully in 2006) as their electricity supplier. The response reports on data from August 2010 and  indicates that EDF Energy has a market share of 74% of London’s electricity market. In terms of dual fuel contracts, British Gas holds the largest market share in London across the ‘big six’ at 40%.

Posted in News | Tagged , | Leave a comment

Update on London Power Tunnels project

May 2012: An update on the London tunnelling project reports that “significant milestones in the construction of three deep level tunnels as part of the London Power Tunnels contract for National Grid” have been reached as part of a project to build new high voltage electricity cable tunnels between Hackney and Willesden (via St John’s Wood) and Kensal Green and Wimbledon. Read the full  story here. Further information on the London Power tunnels project can be read here.

Posted in News | Tagged , , , | Leave a comment

Delivering Power: The Future of Electricity Regulation in London’s Central Business District

23 March 2012:  This report, commissioned by London First in conjunction with the City of London and City Property Association looks at the “long-standing concerns from developers about the challenge of securing a reliable and timely connection to the electricity network for new projects, particularly in the City and the West End where there is often little spare capacity.” Further detail here; report downloadable here.

Measure of the density of central London’s electricity demand.

The summary highlights problems associated with connecting new consumers to the distribution network, specifically:

  • General communication and performance by the Distribution Network Operator (DNO) in dealing with developers could be improved. We recognise that in confidential interviews of this type there is a danger of focussing on the negatives, but found the level of dissatisfaction notable.
  • There is a sense that developers cannot get the level of service they want,or indeed feel is necessary from the DNO. It is notable that developers stated that they would in general be willing to pay more for such a service,but this was not on offer from the DNO.
  • In practical terms, developers expressed a preference for a quick guaranteed connection and suggested that a greater degree of anticipatory investment by the DNO would help to facilitate this.
  • In relation to the third point, above, there is a lack of understanding as to why the DNO has not invested to a greater extent in London’s Central Business District (CBD) in light of the view that there will be a significant localized increase in electricity demand over the next ten years.

Mayorwatch has posted a news story which includes a comment from London’s DNO- UK Power Networks– in response to the study.

Posted in News | Tagged , | Leave a comment

Planning and London’s energy infrastructure

March 2012: The GLA have just issued for consultation the London Plan Implementation Plan which appears to be a new initiative seeking to “set out how the policies of the London Plan will be translated into practical action.” The effectiveness of the London Plan’s climate and energy policies are reviewed in regular monitoring reports, the latest of which was published in January 2012. This report contains a specific section (page 34 onwards) considering some key challenges of London’s energy infrastructure, with a focus on London’s gas and electricity distribution networks, over the coming years and the role that decentralised energy has to play.

Posted in News | Tagged , , | Leave a comment

National Grid’s London power tunnels project

17 October 2011: “Deep beneath the busy streets of north London, one of the largest engineering projects that the capital has seen in the last 50 years has reached a major milestone…”. Read the full article from The Engineer here.

Further information  on this major London energy infrastructure project can be read on this previous post.

Posted in News | Tagged , | Leave a comment