Over 2015/16 several clients came to us with very similar queries. They were developing or looking to invest in generation projects, and had a number of line items in economic models which were proving difficult to lock down.

Embedded benefits

Embedded benefits – that catch-all category for a group of monetary benefits that are revised annually and reviewed periodically – are top of the list. Triads and red zone management are, to give them their functional name, the locational network charging payments available for generating at distribution voltages at certain (different) peak times. Generator payments available for relief of supplier payments for the capacity market haven’t yet got a shorter name.

What we do for clients is take this down to basics. Demystify where the payments – and, sometimes charges – come from, how they are calculated and, importantly, their reliability. A consultant’s dream and a developer’s nightmare is the potential for incremental or wholesale change to the charging regime.

“The thing that most impresses me is your grasp of the topic and the clarity of the work you produce.” Embedded generation client, 2016

Reform and new sources of revenue

Triad – to date a pretty reliable and lucrative embedded benefit – is slated for fundamental reform, the effects of which could be game-changing. Projects are increasingly looking at stacking revenues. The capacity market is of course of huge interest. But so too are National Grid’s ancillary services – once the preserve of large thermal plant with some fast response hydro thrown in – which are now seeing unprecedented levels of participation from both sides of the meter. Unsurprisingly then this is another area where clients have asked where they fit in, what will they be expected to do, how much can they earn and what else can they do in the same year or season?

Oct 05, 2017