Ofgem published their final decisions on the Access and forward looking charges significant code review on the 3rd May (over 3 years since launching the SCR), final decisions were made on two elements of the original SCR.
Four Distribution Connection and Use of System Agreement (DCUSA) modifications for these decisions have already been raised, as Ofgem require these modifications to be effective from 1st April 2023, which is a very tight timescale (and is in line with the start of RIIO-ED2).
Access SCR – summary of decisions by OFGEM
Ofgem have introduced a “shallow” distribution connection boundary, this means that:
- Demand sites will no longer have to pay for reinforcement costs for the wider network (up to a to be determined threshold) but will have to pay for extension assets.
- Generation sites will have to pay for any reinforcement at the voltage level that are connecting at. The existing threshold will still apply, above which the generator will have to pay for all reinforcement costs – the level of this threshold remains unchanged.
- Storage will be treated the same as a generation connection, regardless of whether any required reinforcement is needed for demand or generation.
- 2nd comer rules will no longer apply.
- To connect under the new rules, potential connecters will have to re-apply after implementation (April 2023), this will lose their place in the current queue.
Connection access rights to distribution networks
Connection access rights to distribution networks have also been improved as part of Access SCR:
- Non-firm (curtailable) access arrangements will be available to users where there is benefit in curtailment to manage local network constraints.
- IDNOs and DNOs will set curtailment limits (maximum number of hours or percentage of time) under a non-firm connection offer.
- Non-firm arrangements will have explicit end dates, after which the connection will need to be made firm.
Transmission Network Use of System (TNUoS) Charges:
- The National Grid ESO has been instructed to launch and lead a taskforce to consider improvements to the current TNUoS methodology, with recommendations published post 2022.
- The application of TNUoS to smaller (sub 100MW) distribution connection generation will be reconsidered once the above improvements have been considered.
Distribution Use of System (DUoS) Charges:
The DUoS SCR will be launched shortly separate to the Access SCR, with a decision planned in 2023 and implementation no earlier than 2025, it will cover:
- a review of DUoS Charging
- Improvements to locational signals
- Usage vs Capacity based charges
Shallow Distribution Connection Boundary
DEMAND CUSTOMERS
Connection assets can be split into two types; extension assets that connect a new site to the existing network, and reinforcement assets that upgrade the existing network to enable the new site to connect. Extension assets are always paid for by the new connectee – this has not changed.
The change to a shallow connection boundary methodology for demand connectees will result in the costs of reinforcing the existing network, to enable new sites to connect, will be borne by DNOs, and the costs will be recovered via Distribution Use of System (DUoS) charges.
This change applies to all final demand connections where the reinforcement charges are below the High-Cost Cap (HCC), which is set at £1,720/kVA. Any reinforcements costs above this HCC will be incurred by the demand customer.
The HCC applies to any reinforcement at the voltage level, and one voltage level higher than the voltage connection.
Obviously, this change will increase DUoS costs for all customers as the DNO’s costs increase.
GENERATION OR NON-FINAL DEMAND CUSTOMERS
Under the new rules, generation and non-final demand customers will only pay for reinforcement assets required at the voltage level they are connecting to. The rest of the reinforcement costs will be incurred by the DNO and recovered via DUoS charges.
There is already an HCC in place for generators of £200/kW which will remain in place. This means that if the reinforcement costs for the connection level voltage and one voltage level higher, are more than this existing HCC, the generator will incur these reinforcement costs, rather than the DNO.
For the avoidance of doubt, storage connections are treated as non-final demand and therefore the above rules apply, regardless of whether the reinforcement costs are required for generation or demand.
The usual exceptions to the new rules:
- Any developments that are considered to be speculative will be liable for full reinforcement costs. Although Ofgem have requested that DNOs define a consistent definition of speculative.
- Currently any transmission reinforcement costs that are triggered by a new distribution network connection are paid for by the new connectee, this is not being changed under this decision but will be kept under review.
- Where a customer applies for a three-phase or voltage upgrade, where the upgrade is not Required Capacity, the current rules will still apply, and the customer will be liable for the upgrade.
Connection Access Rights
Non-firm (curtailable) connection agreements are to be standardised across all distribution networks. These agreements can only be offered where a network benefit has been identified for the non-firm connection offer.
As part of the non-firm offer, the relevant DNO will have to set out the limits (maximum number of hours or percentage of time) a connection can be curtailed and a date where the connectee will move to a firm connection where this is required.
For clarification, interruptions caused by faults or damage to the system that results in a loss of supply should not be considered as curtailment, neither should constraints on the Transmission network that result in loss of supply on the distribution network.
Small users including those connected to an iDNO will not be eligible for a non-firm connection. The definition of a small user is “households and non-domestic users that are billed on an aggregated and non-site-specific basis or who are metered directly using whole current meters”.
If you would like any further information on the Access SCR, please visit the OFGEM website or get in touch with Eclipse Power Networks:
- Contact us using the Contact Form on the website
- Call – +44 (0) 1234 486487
- Email – enquiries@eclipsepower.co.uk
- Follow us on Linked In – https://www.linkedin.com/company/eclipse-power-networks
