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British regulator confirms electricity transmission charging model

04 May 2012 17:21:27 | edem

British energy regulator Ofgem on Friday challenged the electricity sector to further develop an improved electricity transmission charging model under its ongoing Project TransmiT scheme.

The project is aimed at boosting investment in low-carbon power production infrastructure by lessening the cost burden on generators based further away from consumption areas.

The existing transmission charging methodology, known as investment cost-related pricing (ICRP), charges generators more the further they are located from demand.

The new approach will retain this location element but update it to take into account the type of generator and how much it uses the network to transmit power, Ofgem said.

In doing this, Ofgem said that an "improved form of ICRP would better reflect the costs placed on the high-voltage system by all forms of generation, including new kinds of generators such as wind farms".

The regulator said in December that wind farms in northern Scotland could see reductions of up to 60% in the amounts paid for using the wider high-voltage network (see EDEM 20 December 2011).

Industry consultation

Transmission system operator National Grid will oversee the next phase of the work, which will involve developing the ICRP methodology in conjunction with the energy industry.

The regulator also consulted on a charging model known as socialisation, which would charge generators the same regardless of location.

But it said it saw this as a "much less desirable approach" because initial modelling suggested it would result in increased overall costs of £7bn (€9bn) for consumers. JS

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