LCCC and ESC Supplier Event. 10 May 2017

Transcription

1 LCCC and ESC Supplier Event 10 May 2017

2 Welcome and Housekeeping Agenda: 09:00 REGISTRATION 09:25 Jennifer Snelson Welcome and Housekeeping 09:30 Ruth Herbert Introduction to LCCC and ESC 09:50 Dan Harry Review of Financial year Highlights 10:05 Andrew Miller Forecasting, SOFM 10:30 Jack Barber - Transparency Tool 10:50 BREAK (20mins) 11:10 Dan Harry & Matt Johnson CFD 11:35 Dan Harry & Matt Johnson Capacity Market 12:00 Jennifer Snelson Future stakeholder engagement and close 12:20 Lunch & Networking (70mins) 13:30 END

3 Welcome and Housekeeping Disclaimer: These presentations (including all content, whether oral or in writing) have been prepared for the exclusive use and benefit of those recipients to whom they are addressed. Unless LCCC provides express prior written consent, no part of these presentations should be reproduced, distributed or communicated to any third party. The content of these slides and any statements made by LCCC in the presentations are provided in good faith; however, neither the content of the slides nor any statements made are or are intended to be any form of representation, undertaking, warranty or legal or other professional advice.

4 Introduction to LCCC and ESC Ruth Herbert, Head of Strategy and External Relations

5 About LCCC and ESC The Low Carbon Contracts Company and Electricity Settlements Company are government-owned, non-profit private companies with designated roles under the 2014 Electricity Market Reform Regulations. LCCC and ESC operate under a costsharing arrangement and LCCC delivers all of ESC s Capacity Market responsibilities.

6 LCCC operations Role Responsibilities Scale FY 2016/17 CFD Counterparty Pre-allocation activities Manage CFDs once allocated 10 GW portfolio: 40 contracts of 15- yr duration 1 contract of 35-yr duration 92m payments for 647MWh (1xsolar, 1xbiomass conversion) Capacity Market Settlement Body (on behalf of ESC) Manage CM financial transactions incl. credit cover Meter assurance Market-wide: 25 companies hold 46 active TA* agreements in 2016/ companies hold 1,585 valid agreements (T-1, TA, T-4) 9.2m payments for 620MW available capacity (2-50MW generators and DSR)

7 Responsibilities on CFD and CM schemes [outsourced to EMR Settlement Ltd]

8 Generic CFD Overview Roles and responsibilities

9 Management of Round 1 CFDs

10 CFD capacity will increase over time Source: CFD Register

11 CFD payments are likely to increase over time Sources: CFD Register 2017 Power Prices SOFM Load Factors LCCC gross demand 2017 Source: CFD Register LCCC only forecasts out to 15-months as beyond this uncertainty is too great Challenges with forecasting further out: Suppliers need to take a view on supply and demand to inform assumptions: - Power prices - Market share CFD payments approx. 400m/year

12 CFD evolution

13 Capacity Market evolution

14 Managing GB Supplier Levies

15 Daniel Harry, Financial Controller Financial Review of the Year

16 Contracts for Difference

17 Capacity Market

18 Settlement System

19 Settlement System Change Programme

20 LCCC Operating Costs 2016/17

21 ESC Operating Costs

22 LCCC 17/18 Budget Changes to system included in operating cost for 17/18

23 ESC 17/18 Budget Changes to system included in operating cost for 17/18

24 Andrew Miller, Head of Forecasting Forecasting Team

25 Contents 1. Introduction 2. Why forecast? 3. How do we forecast? 4. How can we find out more? 5. I don t understand the latest forecasts! 6. How are the regulations changing? 7. Q&A

26 Introduction the team

27 Why do we forecast? We forecast to ensure we can meet our CFD obligations and to help you plan and prepare

28 How do we forecast? our toolset We have the tools to calculate the 19 in 20 risks

29 Forecasting toolset

30 How can we find out more? We communicate to help you understand the levy

31 I don t understand the latest 15 month forecasts The total reserve amount may vary up and down

32 15 Month Forecast ILR with Low and High Case

33 15 Month Forecast TRA with Low and High Case

34 What s new? Regulation change has improved efficiency

35 Illustration of SRA and Reconciliation Payments: Revised Regulations will give you money back quicker

36 Transparency Tool Demo with Jack Barber & Questions and Answers

37 Daniel Harry, Financial Controller Changes to CFD

38 Energy Intensive Industries

39 Green Excluded Electricity

40 Matthew Johnson, Settlement Lead Capacity Market

41 The Capacity Market Designed to ensure sufficient, reliable capacity in periods of system stress Technology neutral, focusing purely on Security of Supply Gives eligible Capacity Providers reliable revenue stream in the form of Capacity Payments Capacity providers face penalties if they fail to deliver capacity when required Philosophy is to allow the market to competitively set the price for capacity Auctions operate on a T-4 year basis with a T-1 year top up Transitional Arrangements in place for DSR

42 Capacity Market Structure

43 Capacity Market operational roles and responsibilities: from pre-qualification to conclusion of the auction Task from applicant perspective Task Owner Task Co-ordinator Prequalification submission Applicant National Grid Prequalification assessment National Grid National Grid Credit cover submission Applicant ESC Credit cover approval ESC ESC Capacity auction Applicant National Grid Capacity auction results National Grid National Grid

44 Capacity Market operational roles and responsibilities: post auction assurance work Task from applicant perspective Task Owner Task Co-ordinator Outstanding metering data submitted Applicant National Grid Metering assessment Applicant National Grid Metering assessment review National Grid National Grid Metering statement/test Applicant ESC Metering test certification ESC ESC DSR test request Applicant National Grid Provision of historic DSR baseline data ESC National Grid DSR test pass National Grid National Grid CM termination National Grid National Grid

45 Capacity Market operational roles and responsibilities: Delivery Year Task from applicant perspective Task Owner Task Co-ordinator Settlement ESC ESC Metering Site Visit ESC ESC Provision of historic SPD baseline data ESC National Grid Satisfactory Days Performance Applicant National Grid Obligation Trading Applicant National Grid Volume Reallocation Trading Applicant ESC CM termination National Grid National Grid

46 Capacity Market Forecast Costs by Delivery Year (October - September) Auction Current Capacity MW Auction Clearing Price KW Annual Value 2014 T-4 47, ,098, T-4 46, ,364, TA ,059, T-4 52, ,179,569, T-1 (ECA) 54, ,313, TA ,047, / / / / / /22 >>> Total to 2035/ T ,098,354 74,661,075 74,661,075 14,501,267 >>> 1,244,809, T ,364,242 17,685,360 17,685,360 >>> 1,081,726, TA 17,059, >>> 17,059, T ,179,569,295 59,597,010 >>> 2,011,673, T-1 (ECA) - 378,313, >>> 378,313, TA - 14,047, >>> 14,047, T ????? >>> - Future T-1 Auctions - -???????????????????? >>> - Total 17,059, ,361, ,098, ,025,317 1,271,915,730 91,783,637 >>> 4,747,630,098 Significant levels of Capacity Market spend starts October 2017

47 Capacity Market Settlement Flows

48 Suppliers Settlement Activity Capacity Market Key Supplier Milestones From EMRS G15 document

49 ESC and the Supplier community

50 Stakeholder Engagement Jennifer Snelson, Communications and External Relations Manager

51 Current engagement Stakeholder Bulletin Joint Introduction to EMR for New Suppliers events with EMRS 18 May ILR and TRA Webinars Industry events LCCC Website

52 LCCC Website

53 Contact Us Tel: Feedback forms